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26 March 2014
Australia Prime Minister Julia Gillard Addresses Asia Society Australasia on September 28, 2011

Australia's Asian Century -- a North American Perspective

While Julia Gillard's Asian Century White Paper received a mixed reception in Australia, it was greeted with admiration in North America.

Former Australian Prime Minister Julia Gillard's Asian Century White Paper received a rather mixed reception in Australia. Some typical reactions were: "nothing new"; "big on rhetoric, small on ideas"; and "a foreign policy failure".

And now the new Australian government, led by Tony Abbott, has removed the White Paper from the government's website, and consigned it to the National Archives.

In sharp contrast, the Asian Century White Paper was greeted with great admiration in North America, especially in Canada, as I reported to a recent excellent workshop on the Asian Century at Wollongong University.

The Canadian reaction is instructive, because Australia and Canada are similar in many ways. Indeed, governments of both countries regularly use each other as benchmarks.

Both Australia and Canada are mid-size countries, with populations of 23 and 35 million respectively. Both have high GDPs per capita, at $67,000 and $53,000 respectively -- in other words, they are among the most advanced countries in the world. And both rank very highly on the Human Development Index, at 2nd and 11th places.

Australia and Canada are both resource-rich countries. Exports of natural resources and agricultural products account for about 80% of Australia's merchandise exports and about half of Canada's.

But Australia and Canada also have some clear differences. Canada has the US as its closest neighbor, whereas Australia closest major neighbors are Asian. Canada also has an unfortunate climate, and a penchant for ice hockey rather than cricket.

It is not surprising therefore that the US is Canada' major export destination, accounting for three-quarters of Canadian exports. Exports to Asia, though growing fast, only account for 10% of total. Australia's situation is the inverse of this, with the lion's share of its exports going to Asia.

Despite recent fast-growing exports to Asia, Canadian Asia-watchers and surveys confirm that the country has not been seizing the opportunities of the Asia Century. Canada should be doing much better. This is especially the case in industrial Ontario, where businessmen have been particularly slow in looking towards Asia's opportunities.

This sluggishness is regrettable because it is occurring at a time when US markets are growing more slowly than in the past. Also, the US is experiencing an energy boom, and may have less need for Canada's energy trade in the future. Canada needs Asia now.

On the policy side, Canada is also behind the curve. It does not have any free trade agreements in Asia. In contrast, Australia has several FTAs in Asia, with ASEAN, Malaysia, Singapore and Thailand. And while Canada is a member of APEC and PECC, it is not a member of the East Asian Summit, unlike Australia and the US. Nor is Canada a party to the Regional Comprehensive Economic Partnership trade talks (Australia is, but the US is not). And Canada is only a late-comer to the US-led Trans Pacific Partnership trade talks, in which Australia is also participating. Finally, Canadian infrastructure for servicing Asian markets has also not been developed fast enough.

Another area where Australia leads Canada is the internationalization of education, despite the excellence of Canada's universities. Canada has 4 universities in the Times Higher Education World University top 100 list, compared with 5 for Australia. If you look at the top 200, again the scores are similar. Nevertheless, Australia has over 500,000 international students (a majority of whom are Asian), while Canada has just 100,000.

And by attracting Asian tourists, Australia is now earning substantial tourist export revenues, almost twice that of Canada.

Australia has also been the most important national destination for Chinese foreign direct investment, over these past years when China's FDI has risen dramatically. Indeed, Australia has received over $40 billion in FDI from China over the past eight years, more than double Canada.

As to Australia's Asian Century White Paper itself, it was the centerpiece of discussions at the recent CanadAsia 2013 conference in Vancouver in May. The White Paper was held up as a model for tackling the challenges and opportunities of the Asian Century, especially its focus on the importance of improving national capabilities and "Asian literacy".

The White Paper greatly inspired the recently released report by the Asia Pacific Foundation of Canada, "Canada’s Asia Challenge: Creating Competence for the Next Generation of Canadians". And according to this report, "Australia has been experimenting with building Asia competence longer than any other comparable country, and it has developed the most comprehensive program for addressing the challenges of doing so".

The US response to the Asian Century has been different, and comprises three main elements. First, there is President Obama's "pivot" to Asia (now called "rebalance"), announced in Australia in November 2011, by which the US is shifting more military assets to Asia. Second, there is the Trans Pacific Partnership talks, for which the goal is completion by the end of this year. And third, the US has a Strategic and Economic Dialogue with China, and similar processes with some other Asian countries. The US response builds on its long-term alliances and partnerships in the region, with countries like Japan, Australia, Korea and the Philippines.

But as important as the US efforts are, there seems to be no attempt to improve US Asian literacy or competence, except for President Obama's program to send students to China. This is a big pity, given the chronically insular nature of many Americans.

Moreover, the US's desperate need for immigration policy reform is now being held hostage by Washington's broken politics, thereby limiting the possibility of further increasing skilled migration from Asia. While Asian migrants are now the fastest growing migrant group in the US, Asian Americans only account for 6% of the American population, half the 12% of Australia and Canada.

In sum, Australia's economic and strategic cooperation in Asia is very impressive compared with North America. However, despite these glowing comparisons, there are obviously many things that Australia needs to do take better advantage of the Asian Century. And the previous government's White Paper has many good ideas, especially for improving Australia's Asia capabilities.

But there is one policy area where Canada seems to be doing better than Australia, and this is in the area of migration. Australia and Canada have many similarities regarding migration. Both have selective migration policies, which focus on skilled migrants.

Both countries also suffer in that too many migrants are not able to fully use their skills for various reasons, such as lack of official recognition of their qualifications, lack of employer recognition of their qualifications, lack of local experience, and insufficient English language skills.

This is a terrible waste of human potential. It also results in "deskilling" or a loss in human capital. Because when it comes to skills, "if you don't use them, you lose them".

Both countries also have very conservative banking systems, which are reluctant to lend to new migrants because they lack local credit and work histories -- even though the migrants may be highly skilled.

There is a major difference however between the two countries in that migrants feel very much more welcome in Canada than in Australia. In general, Canadian citizens recognize that their economy needs more migrants, and that their society benefits from more migrants. They are very proudly multicultural.

The same sentiment does not exist in Australia. The nation's political, business and civil society leaders need to make a greater effort to promote a more positive public perception of migration, and to facilitate their full contribution to Australia's economy and society.

Author

John West
Executive Director
Asian Century Institute
www.asiancenturyinstitute.com
Tags: asia, Australia, Canada, Asian Century, Australia's White Paper on Asian Century, migration, Asia Pacific Foundation of Canada

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