Australia – A Top Tier partner for India in the Indo-Pacific
Address by Australian High Commissioner, Ms Harinder Sidhu,
Ananta Aspen Centre New Delhi
29 November 2018
(check against delivery)
Thank you for the kind introduction, [Ambassador Lambah]. It gives me great pleasure to be here today to deliver an address as part of the Aspen Ananta Centre’s Ambassador Series.
[Other acknowledgements]
This gathering is a timely opportunity for me to speak about the Australia-India relationship against the backdrop of significant economic and geo-strategic developments in our region.
We are in the midst of a busy ‘summit season’, having seen leaders from around the world meet at the East Asia Summit and other ASEAN summits. Earlier this month, our respective Prime Ministers met in the margins of the East Asia Summit. We will see leaders – including from India, Australia, the US and China – meet tomorrow at the G20 Summit in Argentina.
These meetings present a great opportunity. They allow us to focus on our relationships, to recognise what is of value, what we have achieved and what we can yet do together.
These are questions I regularly consider in the context of the Australia-India relationship. By any measure, it is fair to say that the relationship is now at the strongest point it has been for many decades.
I have just returned from a successful visit to Australia by India’s President Kovind – the first ever visit to Australia by an Indian Head of State. It was a visit characterised by two key things.
First, by the depth and breadth of our bilateral engagement. Across our strategic and economic relations, there is a high tempo of activity underway, which is still expanding.
The second feature was the evident warmth and goodwill by both sides toward each other. I saw it in virtually every interaction that the President had, from his meetings with Australian leaders to his interactions with the Australian business community and public, including with our growing Indian diaspora population.
This is no small thing. It is important because it says that our engagement is more than just transactional – it is increasingly built on personal relationships. And as an international relations practitioner, I know that that is a recipe for sustainable and enduring partnerships.
In the course of the past decade, our relationship has grown to become a significant partnership - with mutual interests across a wide range of political, security, cultural and economic fields.
We are two of the strongest advocates of an inclusive, open and rules-based Indo-Pacific.
We support open trade and are negotiating the Regional Comprehensive Economic Partnership along with ASEAN countries, China, Japan, the Republic of Korea and New Zealand.
So I propose to use my time here today to explore two key questions. First, to examine the strength of the relationship – why it is growing. And second, to lay out the reasons why we, in Australia, consider that India, too, should see Australia as a ‘first tier’ partner.
Strategic Uncertainty
At the core, Australia and India share values, enjoy converging interests and understand the importance of working together to shape our environment.
I am often in conversations about the strategic uncertainty we now face globally. This audience is clearly well aware of these dynamics.
The Indo-Pacific region is undergoing a dramatic transformation. It is not one or two countries rising in power in an otherwise static environment. Rather, we are facing an extended period – some decades at least – where economic and strategic power relativities will be in constant flux.
We do not know when, or indeed if, the shifts we see in the Indo-Pacific will reach a settling point.
We do know that two decades from now, the world will look very different. China is predicted to overtake the United States by 2030 as the world’s largest economy in market exchange rate terms. For its part, India is the fastest growing big economy in the world. India is expected to become the world’s third largest economy in US dollar terms by 2030.
Economic power has strategic consequences. By 2020, combined military budgets in the Indo-Pacific will probably exceed US$600 billion, matching military spending in North America for the first time. China’s actions in the South China Sea are adding to the uncertainty and we are again seeing episodes of tension on the Korean Peninsula.
Competition between the United States and China is now actively underway, and it is not clear yet how this will play out.
The question for us is how to best navigate these choppy waters. In these circumstances, we need friends, partners and allies. Whatever the outcome of these global shifts, we should aim to preserve our rights to sovereignty, our freedom of action, democracy, free trade and open societies.
This is why Australia has such a high regard for our relationship with India, becasue we share these values.
So, Australia’s 2017 Foreign Policy White Paper placed India at the “front rank” of Australia’s international partnerships.
I am not certain, however, that there is yet a consensus in India about placing Australia in an equivalent place in India’s strategic frame.
So let me tell you why I think India should pay more attention to Australia.
Why Australia?
To start with, it is worth seeing modern Australia clearly. The feature article of the 27 October edition of The Economist captured Australia well.
It pointed out that Australia has one of the world’s strongest economies, having achieved more than 27 years of consecutive economic growth, built on forward-looking and bold economic reforms in the 1980s.
Australia is now the world’s thirteenth largest economy. We are a top performing nation on almost every measure of excellence, from health, ease of doing business and educational attainment. We are the world’s third largest destination for foreign students and the world’s fourteenth largest goods exporter.
A significant factor in this success is an ability to draw on our diversity. We are a migrant nation. Nearly half of all Australians were either born overseas or have one parent born overseas. Migration from Asia has grown apace in the past two decades, including from India which has formed the largest source of skilled migrants to Australia for the past two years. Today, one in fifty Australians were born in India.
This diversity in our population has supported closer engagement with our region.
Australia has carved out a unique national personality since Federation in 1901. We have transitioned dramatically from the early 20th century, where the UK was our primary trading and security partner.
These facts have led Australian economist and writer George Megalogenis to cast Australia as a ‘Eurasian nation’.
Today, we are deeply enmeshed – economically and strategically – with countries in our region, in Asia, the Pacific and the Indian Ocean.
Foreign Policy
In foreign policy terms, Australia is also a country that does not sit back idly but shapes the world we want to see.
Like India, we have an active tradition in multilateral diplomacy. We were a founding member of the United Nations and an active participant in the 1945 San Francisco Conference which negotiated the UN Charter.
Australia led the charge on the Comprehensive Nuclear Test Ban Treaty. And more recently we have been at the forefront of efforts to support India’s entry into the Nuclear Suppliers Group, having earlier supported it joining the Australia Group.
Australia has engaged deeply with Asian institutional architecture, playing an integral role in the creation of APEC. In the Indian Ocean, we have worked alongside India and others driving IORA to become a more active and able organisation.
We have been a dialogue partner with ASEAN for more than 50 years, supporting the creation of the East Asia Summit (and India’s inclusion in that forum).
Australia’s focus on the Indo-Pacific has been deepening since we first started using that phrase around a decade ago. A year ago, our Foreign Policy White Paper sketched out our key priorities in the region, namely:
- supporting the US alliance, and encouraging strong US engagement in the region
- building our Comprehensive Strategic Partnership with China, with whom we hold very strong ties
- supporting an open, integrated regional economy
- supporting ASEAN and its institutions, particularly the EAS
- and, very importantly, strengthening partnerships with other regional democracies such as India, Japan and Indonesia.
Prime Minister Modi set out India’s own vision for the Indo-Pacific at the Shangri-La Dialogue this year, which aligns very closely with ours. The Prime Minister spoke of open trade, a rules-based order, transparency, the rights of all states, inclusiveness and the central role of ASEAN.
Putting our values and our Indo-Pacific policy into practice, we have worked in different groupings of countries to advance our shared interests, including the Quadrilateral Dialogue with India, Japan and the US, as well as in trilateral groups with India and Japan; and with India and Indonesia.
During the most recent Quad meeting on 15 November, participating countries reaffirmed the goals and principles which they share for the Indo-Pacific. Participating countries focused on the need to work with partner countries and forums, and to strengthen connectivity and the quality of infrastructure, based on transparency, economic viability and financial responsibility.
These dialogues are essential to build trust and confidence among partners, and to build shared agendas.
We are not all talk, however. Australia has done much work also to ensure we have a capable and agile defence force which can support our vision for the Indo-Pacific. We are increasing our defence spending to two per cent of GDP by 2020-21, investing over AUD 200 billion to ensure we have the capabilities to build on our ability to project into the Indian and Pacific oceans - two areas where we have large maritime zones.
Our defence cooperation with India is at the highest tempo it has been in our two countries’ histories. We have gone from 11 defence exercises, activities and meetings in 2014 to 29 in 2017 and 38 in 2018.
Australia is doing its part to strengthen Indo-Pacific security and stability in our region. In the Pacific, Prime Minister Morrison announced earlier this month a suite of initiatives to further deepen ties, covering the breadth of our engagement, including infrastructure, diplomacy, defence, security, law enforcement and labour mobility. Doing what we need to do to build stability and economic propersity in our region.
Despite all these measures, there remains a persistent myth in India that Australia’s close relationships with large powers constrains our freedom of action. Allow me to set the record straight.
Although we have a trusted and valued defence and security alliance with the United States and a strong economic relationship with China, we always raise concerns with both when required to defend our interests. Being close friends doesnt mean you always agree.
We were one of the few countries to call out China’s failure to acknowledge the binding UN Law of the Sea ruling regarding its activities in the South China Sea. We have been clear to the United States when we disagreed on its positions on tariffs and its withdrawal from the Trans-Pacific Partnership.
These are some of the many reasons why India should seriously consider Australia a first tier strategic partner.
Economic and Trade Policy
While our strategic convergence has deepened, we have some way yet to go to get our economic ties to reach their full potential.
Today, India is our fifth largest trading partner (two-way trade of AUD 27.4 billion). But this is only 3.6 per cent of Australia’s global trade - roughly the same as New Zealand and we can do better.
With this in mind, the Australian Government commissioned Peter Varghese AO, former Secretary of the Department of Foreign Affairs and Trade and former High Commissioner to India, to prepare a strategy to chart a course for a deeper economic partnership.
The Government did this for several reasons. An India Economic Strategy would:
· enable a three-dimensional conversation about trade and investment that was broader than the proposed bilateral trade agreement—the Comprehensive Economic Cooperation Agreement (CECA);
· provide an evidence-base for how we build our trade and investment relationship out to 2035; and
· identify the sectors and states where there was the greatest potential for greater economic engagement.
Importantly, the work was commissioned with the understanding that economic relations underpin our international engagement and growing the economic relationship was integral to elevating India to a top tier partner.
The Strategy, delivered by Mr. Peter Varghese to the Australian Government in July, focusses on boosting trade and investment with India. To do this, it charts a course to:
- lift India into Australia’s top three export markets
- make India the third largest destination in Asia for Australian outward investment
- bring India into the inner circle of Australia’s strategic partnerships, with people-to-people ties as close as any in Asia.
These are very ambitious goals. The Australian Government’s decision to endorse the India Economic Strategy and commit to its ambitious goals is a strong indicator of the priority we assign to deepening the economic partnership.
There is the simple fact that Australia should invest more in what is now the world’s fastest growing large economy. India’s economic reforms of recent years – the introduction of the GST, of bankruptcy legislation, improvements in Ease of Doing Business – have made it a more attractive prospect for Australian business and investment.
But it is also more than this. It’s about Australia and India working together to promote open and free trade and resisting the rise of protectionism globally. The importance of this was underscored by Prime Minister Modi’s speech to the World Economic Forum earlier this year.
It is more important than ever that we maintain a commitment to liberal trading regimes.
For both Australia and India the evidence of history has been clear. Keeping our markets open to trade and investment strongly correlates to economic growth. In a globalised world, nobody can get rich by themselves.
Australia’s economic success has come from being an open-trading nation. We have long championed open markets as a sure path to national prosperity; and have backed that idea by unilaterally dismantling most of our tariff barriers in recent decades. We have promoted the WTO multilateral trading regime as well as regional and bilateral free trade agreements. And just last month, we became the sixth country to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the TPP-11), allowing the Agreement to enter into force in December this year.
The geopolitical dimension of this is also evident – where economies are linked through free and fair trade, a virtuous cycle is created. Each is invested in the success of the other, as well as in global stability and security, for the sake of their own prosperity.
To achieve the kind of economic partnership, the IES is aiming, both sides need to come to the party. The Australian Government has done much to galvanise interest in India among our business community. It is investing a great deal in implementing the Economic Strategy. And we are pleased to see that the Indian Government has also commissioned a counterpart strategy for Australia - a very important first step.
India’s complexities can sometimes make economic reform particularly challenging. But I would urge India to continue this effort. Reducing barriers to trade and domestic subsidies will build a stronger, more competitive and more resilient economy. I understand the resistance to this idea particularly in the agriculture sector – Australia has faced similar concerns. I note, however, that there is good evidence that there are benefits in this approach that the overall effect of subsidies to Indian farmers actually reduces gross farm revenues by over 6 per cent per year.
Conclusion
Australia is well on the way to building a first tier partnership with India. We have already done so much that you might ask: what more is there? Let me share a few ideas.
On the strategic front, the logical next step to consolidate our defence activities would come from agreeing a Mutual Logistics Support Agreement between our militaries.
It would cement the increasing interoperability of our defence forces, demonstrated by our regular exercises and our ability to conduct increasingly complex operations, such as a mid-air refueling across our different air systems which we dealt during Exercise KAKADU in August 2018.
A logistics agreement makes sense for India given Australia’s strategic location at the nexus of the Indian and Pacific Oceans, and Southeast Asia, vital areas for India’s economic security in the Indo-Pacific.
On the economic front, we should do all we can to create incentives for stronger trade and investment between our two countries. If the environment is right, business will follow.
To support this, we can deepen our ministerial, leaders’ and CEO-level engagement on trade and investment. Australia will seek to establish a Strategic Economic Dialogue between our countries, implementing one of the recommendations coming out of the India Economic Strategy.
To conclude, let me reiterate that Australia is a logical partner of choice for India.
We continue to play an influential role promoting the rules-based order, open trade and the rights of all states within ASEAN and its institutions, including the East Asia Summit - and these mutual interests ensure that together, we can help build a peaceful and prosperous global order. With our unrivalled economic success and commitment to building our economic relationship with India, we can play a valuable role supporting India’s economic growth.
This relationship will benefit both countries and the wider Indo-Pacific region, and I look forward to watching the relationship grow. I am very optimistic about what we can do together.
I’d like to thank the Aspen Ananta Centre for the opportunity to speak this evening.