The Hon Dr Craig Emerson MP

Minister for Trade and Competitiveness

Australia India Business Council dinner

25 September 2012

Thank you for your invitation to speak again tonight to the Australia
India Business Council.
Today Id like to talk about the economic re-emergence of Asia,
and the Australian Governments White Paper looking at how our
country can best lock into that resurgence.
Against this backdrop, I want to examine the relationship between
India and Australia - at trade flows, at links between our business
communities, and negotiations on the Free Trade Agreement.
In my lifetime, Asia has doubled its share of global economic
production, as largely agrarian societies have industrialised and
urbanised.
In the last few decades alone Asias share of world merchandise
trade has risen from one-fifth in 1975 to almost one-half in 2010.
In the first decade of the 21st Century, Chinas economy grew at an
average 10 per cent a year, and Indias at 7 per cent.
The United States, meanwhile, grew at 1.6 per cent, and Europe at
1.5 per cent.
China is already the second-largest economy on earth, and Indias
the third largest.

This realignment of global economic power has already had

profound impacts on Asian lives - on life expectancy, health,
education, access to employment, and access to services.
In Australia, demand for energy and resources from countries such
as China have helped us weather the Global Financial Crisis and
trained our thinking on how to turn our engagement with the region
into a long-range economic strategy.
The Asian Century White Paper being finalised at the moment
describes what life for Australians could be like by 2025 if we make
the most of the opportunities on offer.
For many, the Asian Century is all about tapping into Chinas
dramatic transformation.
But that is to ignore the great weight and enormous potential of
India.
In fact the opportunities of the Asian Century are to be found
across the whole region.
And it would be a mistake to bracket together India and China because their economies, societies and cultures are very different.
Much of Chinas growth in recent decades has come from
engaging its large population in manufacturing.

Indias economic development, meanwhile, has been more based

on services - more private-sector led.
Indias growth has not been as dramatic as Chinas.
There has been a protracted slowdown in its economy since March
last year.
Investment and output has slumped and confidence is down.
Growth has slowed to about 5.5 per cent over the last year, after
two years of growth above eight per cent a year.
But its potential for growth is just as great as Chinas.
Chinas population is already hitting demographic humps.
By contrast, Indias youthful demographic could be a fast track to
economic development.
Indias working-age population is, on average, 80 per cent smaller
than Chinas but by 2030 it will be larger.
In coming years, the number of Indians turning 20 each year will
roughly equal Australias entire population.
But there are big challenges ahead for India.
Productivity rates are low, but growing quickly.
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Inflation is stubbornly high.

To address this greater investment in infrastructure is needed.
Education also has a long way to go, notwithstanding the great
strides made in recent times.
Wealth and wage gaps also pose a challenge for India, as they do
for many other emerging economies.
Guaranteeing energy and food security is another challenge
weighing on policy decisions around the world.
As are climate change and other threats to the environment.
Australia and India - working together - can do a lot to respond to
these challenges.
Thats why Prime Minster Gillard has committed to visiting India
later this year.
But economic success in the Asian Century is less about
government-to-government talks and more about business tobusiness links.
Thats why organisations like the Australia India Business Council
are in the drivers seat.

And its why the Australian Government is such a strong supporter

of the Australia-India CEO forum.
At their first meeting in March the Forum Members decided to
focus on how to make it easier for our two countries to engage.
They want to improve the exchange of information on safety
standards in mining, manufacturing, construction and transport.
There is also enthusiasm to tackle issues around worker mobility,
dividend repatriation, and infrastructure development.
And they plan to hold their next meeting to coincide with the Prime
Ministers visit to India.
I know the Prime Minister plans to meet with the Forum members
to get their views on how to improve the trade and investment
relationship between our two countries.
And I know she is as keen as I am to cut the remaining barriers to
trade and investment between our two countries.
Because India is such an important economic partner to Australia.
In recent years, trade between our two countries has grown
rapidly.
With two-trade trade reaching $20 billion in 2011.

But it is still relatively narrowly based.

Most of our trade is in coal, gold and copper ores - and exports in
some other areas have declined in recent years.
There are many bright lights, however.
Large-scale LNG exports are due to commence in about two
years.
Australia has also attracted record levels of Indian investment in its
considerable coal reserves.
That will drive coal exports in the future.
And I welcome, as will Australian business, the proposals earlier
this month by the Indian Government to permit foreign direct
investment in multi-brand retailing.
For Australia, economic diversification is central to making the
most of the Asian Century.
As incomes in India grow, services are foremost in the minds of
many Australian businesses.
Education exports currently dominate our services trade.
We are all familiar with the issues which arose during the period of
strong growth in Indian student numbers in Australia.
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These concerned student safety and welfare, expectations about

permanent residency in Australia, the quality of certain courses
and institutions, the balance between higher education and
vocational education and training and so on.
Since then, Australian governments - Commonwealth and State have taken steps to resolve those issues.
The number of Indian students in Australia still remains well down
from their peak.
But we are focussing on quality, durability, and reputation - not just
numbers.
Slowly, we are re-building the education relationship between our
two countries.
This has helped visa numbers to increase over the past year.
Today India is our second largest source of international students
behind China.
And there has been solid growth in tourist numbers between our
two countries.
In addition, many come to work and to stay.

The number of people born in India who now make their home in
Australia doubled between 2006 and 2011.
These are good reasons to welcome the proposed start of direct
Air India flights to Australia.
The Comprehensive Economic Cooperation Agreement currently
being negotiated has the potential to open trade and investment
between our two countries.
The benefits of a comprehensive, high-quality agreement would
come through future growth resulting from greater economic
integration.
So far negotiations have made some useful progress on the broad
structure of the agreement and on some text.
But theres still a long way to go.
Consistent with the Gillard Governments trade policy statement
from April last year, Australias objective in all its FTA negotiations
is to achieve high-quality, truly liberalising bilateral and regional
trade agreements that do not detract from, but support, the
multilateral trading system.
We want the most comprehensive deal we can find - something
that helps deepen our engagement, both through increasing the
flow of goods, services and investment, and by building trust and
understanding.
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And growing Australias relationship with India into the Asian

Century.
As the Government puts the finishing touches to its White Paper,
we see India as a big part of the answer to all the great challenges
Australia will face this century.

Critics would claim that at times, one side or both has been too
focussed on the short-term, or too easily discouraged or
disillusioned, too ready to look elsewhere in framing foreign or
trade policy.
Others claimed Australia was too small in both population and
economic weight.
None of that is true any more.
Now, we have a coherent commitment to a comprehensive
strategic partnership.
Now, we are determined to find more ways of working together
with India.
The possibilities for cooperation are greater than ever before.
In realising that partnership, we need your help to maintain focus
and commitment.
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Ultimately, it is business dynamism and entrepreneurship that

forms the vanguard of our relationship.
I look forward to discussing how we can do that with you tonight.
Thank you.

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