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November 06, 2017

Transcript of Minister for Foreign Affairs Dr Vivian Balakrishnan’s Phone Interview with The Australian, 3 November 2017

The Australian (Western Australia Chief Reporter, Andrew Burrell): I went to a press conference with Julie Bishop two days ago here in Perth and she said she would be meeting you while you were here. What do you think you would be talking about with Julie Bishop?

Min: Well, both Australia and Singapore are in the heart of the Asia-Pacific, and it has been a rather exciting region for a variety of reasons so that’s usually at the top of our agenda.

The Australian: Is there anything specific that you would be wanting to talk about this time? North Korea for example?

Min: Well, North Korea is the most urgent but it is not necessarily the most strategic. Maybe just let me run through a couple of key factors in play. First, the point is that if you look at the growth potential, the economic potential, in the Asia-Pacific – in particular in Southeast Asia, Northeast Asia and South Asia – there is still tremendous growth potential for at least another couple, or three, decades. That is the first point.

The second point is that it is a time of immense change for two sub-reasons: first, is the technological revolution which is really transforming the way we live, work, play, organise our societies, transforming our industries. It will completely transform logistics chains, and global value chains as well. The second sub-reason why there is so much foment in our part of the world is the fact that the rise of China over the past two decades, no – in fact since the Eighties – has been unprecedented; never before in human history have you had so many hundred million people lifted from abject poverty. And that economic prosperity is translated into military and strategic heft on the part of China. Then, a couple of decades behind, you have got India, whose population will exceed China within a decade but whose GDP is only about, I think, a third of China, and whose trade is only about a fifth of China. But that’s another big elephant that is beginning to move. This is going to shift the needle.

The Australian: Yea, absolutely.

Min: The third element in this is the question mark over the United States of America, meaning, for the last 70 years, in particular Singapore and in fact the other Asian Tigers in Southeast Asia, have benefitted from Pax America, which was defined primarily by a multilateral rules-based world order, free trade, economic integration, which gave enormous opportunities especially for open economies like ours who were willing to globalise even before the word “globalisation” became fashionable. And we were outward-oriented. So for all these reasons, you’ve got an area with high growth potential but because of the fact that all these factors for change are all coming to bear at the same time, this makes for rather exciting and somewhat challenging times.

The Australian: So you’ve got Donald Trump, for example, about to begin a rather lengthy trip to Asia.

Minister: Yes, I think he has just started off on his journey. It will be a 12-day journey.

The Australian: Indeed, it is 12 days. He is an advocate of protectionist trade policies which has been vital to Singapore’s prosperity. Julie Bishop just the other day said she liked to see the US played a stronger role in Asia’s strategic, political and economic affairs. Would you agree with that?

Min: Well, we’ve met President Trump twice so far in the last couple of months and most recently about two weeks ago. I would caution against the over-simplification of his approach and of his policies. The first thing that I would say is that President Trump remains engaged with Asia. He wouldn’t be embarking on a 12-day trip, he wouldn’t have made all these phone calls and all these interactions over the past 10 months, if he did not perceive strategic significance of Asia. So that’s the first one. It’s not neglect, not at all.

The second point I would make is that we must not over-read the economic change, or changes that he is trying to implement in the United States. Let me give you an example, the simplistic way is to say that the United States is going to turn isolationist and protectionist. That’s the simplistic way of looking at it. But if you look at the United States’ cumulative investments in Asia, and in particular Southeast Asia, the United States has got more – I think it’s about US$280 billion worth stock of investments, of FDI in Southeast Asia, which is more than what the United States has in Japan, China and India combined. This is the statistic that Vice President Pence made in his speech when he was in Jakarta a few months ago. So America has real skin in the game, in terms of its ability to take advantage of growth in Southeast Asia.

Another related fact is that the American export of services and goods to Southeast Asia provides jobs for at least half a million, if not more, American workers back home. I am citing all these so that we understand that there is real stuff at stake in terms of jobs and profits for American companies and American workers. This, therefore, in a sense sets the bounds or parameters for which changes President Trump is trying to institute.

I do accept that he is focused on deficits. He is focussed – from a negotiating point of view – in trying to secure more bilateral deals and arrangements rather than multilateral. But frankly, this is something that he’ll have to sort out over the months and years to come. We were disappointed by his withdrawal from the TPP. We still think the TPP was a good idea for both strategic and economic reasons. Nevertheless, there is still some hopes among the TPP-11 that we can make progress and maintain a reasonable package going forward, which maintains high levels of ambition, high levels of economic integration amongst the remaining 11 of us, and at the same time, leave the door open for America to come back, in some way or the other in the future.

The Australian: In some of the readings I have done in the last few days, and it looks like some of these may be exaggerated analysis, some people have said that the US is withdrawing from Asia, and that China is stepping into the vacuum. Singapore has big choices to make, as a small nation caught between two superpowers. Do you agree with that sort of analysis?

Minister: No, I think that is too simplistic. First, as I said earlier, I don’t think the Americans can afford to withdraw from Southeast Asia or from Asia. There is too much at stake for American jobs and American economic interest. That’s the first point. Yes there may be some changes in the way he trims his sails, as I said, in terms of how he approaches trade, how he looks at deficits, and how he intends to pursue more bilateral rather than multilateral deals. But at the strategic level, I don’t see an American withdrawal from Asia.

The second point is on China. China is an unprecedented phenomena in human history. If you look in terms of China’s relations with us in Asia, or even with us in Singapore for that matter, China is our largest trading partner. But even little Singapore is the largest foreign investor in China.

The Australian: Oh really?

Min: Yes, so we’ve both got skin in the game, we need China to succeed, we need China to keep growing and we all gain from a China that rises and is plugged into a multilateral, rules-based, open world economy with free trade. So it’s wrong to look at it in that zero-sum game and to posit everything as having to make invidious choices.

The whole purpose of our foreign policy and economic orientation is to avoid being forced into making invidious choices. What we believe in, is a multilateral, rules-based, open world order with free trade. It is basically characterised by inter-dependence and the fact that we gain far more by working together and investing in each other. And the proof of this, is in fact, if you look at global value chains nowadays, there’s no such item that is made purely in one part of the world. And we’re better off with the way it’s organised this way because in fact, if we can create a zone of prosperity, of reasonable calmness, this is a recipe to achieve peace and prosperity. The opposite way of looking at it is to try to split the world into rival blocs: not trading, not invested in each other, zero-sum games, proxy wars. The latter is not the model that we want.

Some people may think we are being overly optimistic, but I think there’s still a reasonable chance that we can fulfil this vision of an inter-dependent world, mutually invested in each other, trading with each other, securing the peace, and achieving prosperity for our people. And the real game in town is for all of us to deal with the digital, technological revolution, or what some people call ‘Industry 4.0’. You see, the real problem, the real reason why there is political angst all over the world now, is that middle-class jobs and middle-class wages are under pressure. And the cause for this angst actually is not trade. Trade is unfairly blamed for this. The real challenge is the technological revolution. And the real answer does not lie in raising barriers. The real answer lies in re-tooling, re-skilling our people, re-investing in infrastructure, and in particular, digital infrastructure for our economies.

So we need more trade and more interconnects and more investment, not less. So that’s the real game in town, and we need national governments and national politicians to understand that. And we’ve got to make the case for our own people because at the end of the day, trade policy, foreign policy begins at home. If we can’t achieve the consensus for remaining open for trading and for investing in each other, that’s when you get a very divisive and ultimately futile political debate back home. And instead of preparing people for the future, all you are doing is enraging people or playing on a politics of envy. That’s not a recipe for progress.

The Australian: Just to finish on Australia – Singapore relations. Malcolm Turnbull said last year, I think during a visit to Singapore, that the cross partnership between ‘the little red dot’ and ‘the wide brown land’ makes more sense than ever. What do you think are some of the areas that can deliver closer relations between Australia and Singapore in the years ahead?

Min: Well, I think we have a great relationship. It’s underpinned by a long history. But really if you look at it, you know, we are completely strategically aligned, and economically complementary. So we don’t compete against each other, and we don’t work at cross purposes with each other. The analogy I’ve given sometimes is to treat Singapore, which is only a city state, a port, really as its Australian’s northern most port in Southeast Asia.

The Australian: Ok, I like that.

Min: So, we are the portal for Australia to engage Southeast Asia and beyond. And you know it’s the old airplane analogy of the Kangaroo route – you hop your first hop to Singapore before you hop to the rest of the world. So if you look carefully at the CSP, what we’ve done is to further liberalise trade, movement of people, recognition of qualifications, make it easier for our businesses to engage one another, make it easier for our start-up companies to build their first overseas branch, either in Australia or vice versa in Singapore.

If you look at the innovation and entrepreneurship space, we have got, I think, the Australians call it the “Landing Pad”, we call it “The Launch Pad”. So that a young Australian with a brand new idea starts up in Sydney, or Canberra, or wherever else – and his first hop then is to Singapore. He gets to meet more people and he gets to access the Asian market and ultimately the rest of the world. There is a lot of to-ing and fro-ing in education, in business, in entrepreneurship, and in start-ups, particularly digital start-ups.

The other big element of the Comprehensive Strategic Partnership (CSP) was in defence relations. The only reason we can have such close defence relations is because there is so much strategic trust between us. I don’t think Australia would be so welcoming of foreign troops at the levels that we send across to you, if we were not such trustworthy friends. And again, it’s complementary. It allows our forces to train together, to inter-operate together, and we do inter-operate together in other parts of the world. That’s been a very major pillar for our relationship.

The Australian: I didn’t realise they were so significant though. I read that there were up to 40,000 Singapore personnel who will be conducting army training in Australia, for up to 18 weeks a year, I think starting in 2021. Is that on track, as far as you know?

Min: I’ll have to double-check the exact figures but I think it’s in the right ballpark. But the larger point is this: can you imagine Australia willingly welcoming such numbers from any other country? I think you would be hard-pressed to find anyone else whom – first Singaporeans being so comfortable in Australia, and for Australia to be so welcoming.

The other point is that in terms of people-to-people exchanges. I’ve lost count of the number of students who study in Australia, or the alumni of Australia, who are working, and leading companies or even in government, in Singapore. I think you get about a million Australians visiting Singapore as tourists, and maybe about 400,000 Singaporeans going across to Australia. We’ve got things like work-holiday programmes, and basically more opportunities for our young people to meet, to work and play, and to explore the world and expand their minds together. The CSP is a real, comprehensive strategic partnership in the fullest sense of the word.

The Australian: Absolutely. Are you just coming to Perth for this trip, or are you going elsewhere in Australia?

Min: This trip is just to Perth.

The Australian: Just for the conference?

Min: Yes. But again you realise –one other small point – that Perth is closer to Singapore than you are to Sydney or Canberra.

The Australian: Yes, I think it’s amazing.

Min: I’ve flown that – it’s about 4 hours and 50 minutes. You are certainly closer to us than you are to your own capital.

The Australian: That’s right. We’re very, very close in more ways than one. Thanks so much for your time. I’m battling a deadline to get this to tomorrow’s newspapers, so I’m going to write up the story. I really appreciate it, and I hope you have a great time in Perth this weekend.

Min: Thank you. I look forward to seeing you in person one of these days.

The Australian: Yes.

Min: Take care, Andrew.

The Australian: Thank you very much. Don’t worry, take care, bye.

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