Charge D’Affaires Carouso speech: CEDA 2017 EPO, Brisbane

Committee for Economic Development of Australia (CEDA)
2017 Economic & Political Overview, Brisbane

 (As prepared for delivery – February 17, 2017)

I wasn’t here for EPO 2016.  Did the speakers get it right?  Could anyone have predicted the year that just ended?

With that said, I will do my best to map out where I see the U.S.-Australia relationship headed in 2017 – politically and economically.  And next year, we will see how I did.  The truth is, I feel pretty good about the big picture; about both U.S.-Australian relations and the U.S. role in Asia.

This is because I have no doubt our future will be a continuation of our past.  We remain united by our shared vision for regional and global security and prosperity.  Our ties to each other are broader, deeper, and more complex than many realize.  They include business, cultural, and family ties that go far beyond the official relationship most often captured in the press.  Of course change is possible, and expected.  But our foundation is solid.  The ties that bind our nations remain firmly intact.

I also see exciting opportunities on the horizon.

In 2017, the United States and Australia will continue to expand our incredibly broad, intricate, and unique relationship across the entire range of human endeavor.  Trade and investment, energy, culture, science, medicine, agriculture, aviation, space exploration, and security and intelligence partnerships will all flourish.  Undergirding such progress is our alliance and the unmatched stability it provides.

The alliance is as strong as ever.

The ANZUS Treaty has been in place for 65 years, during which it has provided for our mutual defense, anchored regional stability, and fueled economic growth. In that time, the United States has been led by 13 Presidents – six Democrats and seven Republicans.  President Donald Trump and Prime Minister Malcolm Turnbull have reaffirmed the U.S.-Australia alliance and committed our countries to cooperation on global challenges – as we have for over seven decades.

When our foreign and defense ministers meet at AUSMIN in 2017, they will continue an ongoing dialogue that keeps the alliance relevant to new opportunities and new challenges.

In just a couple days, I’ll be in Darwin, where the city will mark the 75th anniversary of its bombing during World War Two.  Today, Darwin plays host to the U.S. Marine Rotational Force.  This year’s MRF-D rotation will be the largest to date, and will include an expanded air component.  Our Marines will train with their Australian counterparts to achieve an ever-greater degree of interoperability.  And, I’m particularly proud to note that the Marines serving in the Top End are also active members of the Darwin community.  They’ve mentored students, led community cleanups, and participated in local sports.  They have continued a legacy of mateship that began when the USS Peary went down fighting in the February 19, 1942 raid against Darwin and U.S. Army Air Corps planes scrambled to help defend the city.

That legacy is alive on many fronts.  Just last weekend, we launched the Enhanced Aircraft Cooperation initiative between the U.S. Air Force and the RAAF – another product of the Force Posture Agreement.  A squadron of America’s most advanced aircraft – the F-22 Raptor – arrived at RAAF base Tindal last Friday for exercises that will further enhance the ability of our forces to work together.  Speaking of aircraft, nearly 100 U.S. companies and five U.S. states will participate in the Australian International Airshow at Avalon at the end of this month – a record high level of American exhibitors at this world-class event.

Avalon is a showcase for the extraordinary cooperation between the U.S. and Australian defense industries.  One of the best examples of this cooperation is the F-35 Lightning II, more commonly referred to as the Joint Strike Fighter.  With all the attention given to this project, the economic benefits to Australia are often overlooked.  Lockheed Martin’s investment in F-35-related elements in Australia has resulted in over $800 million U.S. dollars in Australian exports and thousands of jobs across five Australian states.  At the height of production, the F-35 is projected to generate up to $4 billion U.S. dollars in exports for Australia and provides work to 55 Australian companies involved in production.

U.S. companies Raytheon and Northrop Grumman are similarly invested with their Australian counterparts.  Raytheon provides high paying jobs to 1,200 Australians and has over 1,500 Australian customers, suppliers, and partners.  Australian firms are doing the same in the United States.  Shipbuilder Austal is not only providing 11 percent of the U.S. Navy shipbuilding requirements, it is the largest employer in Alabama.  This marriage of security and commerce makes our countries both prosperous and protected.  Today and in the future.

The importance of our relationship extends far beyond our borders.  To quote Admiral Harry Harris, Commander of the U.S. Pacific Command, “The Australia-U.S. alliance matters … to the region, and to the world.”  Our militaries play an important role – regionally and globally – in maintaining an international rules-based system and standing up to terrorism and extremism, both overseas and on our home fronts.  I know from talking to U.S. veterans who fought alongside Diggers how much they, and our entire chain of command, value the alliance.  This includes our new Secretary of Defense, Jim Mattis.  In his previous role as a Marine General who commanded forces in Afghanistan, Mattis wrote to an Aussie counterpart: “We Marines would happily storm hell itself with your troops on our right flank.”

As Pacific powers, our shared goal is a region that is peaceful, prosperous, and principled.  By definition, this cannot be an effort of our two countries alone.  We want all nations in the region to join us.  What does this look like?  It looks like the trilateral partnership between the United States, Australia, and Japan.  This growing relationship is built on enhanced dialogue, and will only become broader and deeper in the year ahead.  For starters, we have signed a trilateral information sharing agreement that will expand the scope and complexity of our military exercises, making this partnership more vital and relevant to the region.

China is, of course, a critical counterpart in regional efforts.  The U.S. bilateral relationship with China will remain one of our most important.  We welcome a peaceful, stable, and prosperous China that plays a responsible role in the region and more widely in global affairs; as befits a nation of China’s international stature.  Like Australia, America will continue to work effectively with China across a broad range of issues, but will speak frankly when we disagree.

The United States will also continue its involvement in ASEAN and APEC.  Why?  Because these institutions help integrate the region internally and the region to the wider world.  Because the Asia Pacific is home to four of America’s top 10 trading partners; five of seven of our defense treaty alliances; the world’s three largest economies; 25 percent of global GDP; nearly 40 percent of  global GDP growth; and over half of the world’s population.  America’s future is inexorably linked to this part of the world.  Bolstering its fortunes and security is clearly in our own national interest.  We are a nation of the Pacific.

Now that I have convinced you that our strategic alliance is solid and sound, I will speak about our economic alliance – fueled first and foremost by two-way trade and investment.

We are already great business partners, and business will only get better.  The U.S. economy is at its strongest since the global financial crisis.  Let me give you a few quick numbers.  U.S. GDP has risen for over seven straight years.  This is the third longest period in U.S. history without a recession.  We have seen 74 straight months of private sector job growth, the longest streak in almost 100 years.  Unemployment is down to 4.7%.

The United States remains, by far, the single largest recipient of global foreign direct investment:  $3.1 trillion U.S. dollars in 2015.  There is no greater indicator that the world believes in continued economic growth in the United States.  Proposed economic policies, such as cutting corporate taxes and regulations, and major new investments in infrastructure are expected to fuel further growth.

Trade agreements will accelerate that growth.  The Trump administration may have changed our approach from multilateral to bilateral agreements.  But, the goal remains the same:  to reduce barriers to, and raise standards for trade and investment, regionally and globally.  We want to spur a race to the top.  High-quality, high-standard bilateral agreements do raise the bar.

I saw this first hand more than 10 years ago when I was involved in the AUSFTA negotiations.  The AUSFTA is a world-class trade agreement.  It has driven trade and investment between our countries for the last 12 years and secured for the United States the status of Australia’s second largest two-way trade partner.

Not only is our trade relationship robust, our investment partnership is unrivaled.  One sure sign of trust between friends is to entrust them with money.  The United States and Australia currently invest billions of dollars in each other’s economies.  Here is just a taste of our investment portfolios.  Between 2013 and 2016, two-way investment increased nearly 50% – from $1 trillion to $1.5 trillion U.S. dollars.  In 2017, we will top this figure.

The United States is and will continue to be the largest foreign investor in Australia.  At $800 billion Australian dollars, U.S. foreign investment in Australia is nearly double that of the number two investor, Japan.  Many U.S. companies – Bechtel, Boeing, Chevron, and Exxon Mobil to name a few – have been successfully investing and doing business in Australia for the past 100 years, if not longer.

And, the grand scale of U.S. investment generates significant benefits for Australia.  I have some examples for to share with you.  Earlier this month, WA Senator Chris Back highlighted in parliament the $100 billion Australian dollars that U.S. company Chevron has invested in its Gorgon and Wheatstone LNG projects in Western Australia.  Chevron’s investment represents 75% of all investment in Australia’s LNG sector.  According to Senator Beck, U.S. investment will help Australia become the world’s largest LNG exporter before 2020, and will put up to $65 billion Australian dollars into the Australian economy.  That’s 3.5 percent of Australia’s GDP.

Boeing Australia is the company’s largest footprint outside of the United States.  In November, Boeing Australia won the Australian government’s inaugural Investment Award.  At the awards ceremony, Minister Ciobo highlighted Boeing’s contributions to the Australian economy, including employing over 3,000 Australians, R&D activities, science and space cooperation with CSIRO, and community development.  The next time you find yourself on a Dreamliner, remember that key components of the aircraft are manufactured in Melbourne.

Closer to home for all of you, by which I mean closer to Queensland, Baltimore-based McCormick & Company has invested $150 million Australian dollars in Palmwoods-based high-tech agribusiness Gourmet Garden.  Australia-wide, Camp Australia will be able to expand the care it offers in 600 schools thanks to investment from U.S. private equity firm Bain Capital.  These examples are just a few of the numerous U.S.-Australia business success stories.

Every day brings new opportunities for investment and joint projects – in minerals, tourism, agriculture, defense, energy, biomedicine, infrastructure, and other sectors.  Queensland is fast emerging as a hub for the manufacture of revolutionary alternatives to conventional drugs – known as biologics – which Australians are pursuing in partnership with U.S. pharmaceutical companies.  U.S. companies have also made large investments in Queensland’s LNG sector.

We celebrate Americans investing in Australia, and we also very much want Australians to continue investing in the United States.  The United States is the top destination for Australian investment abroad, and Australia consistently ranks in or around the top 10 investors in the United States.  Our new Administration has made improving and overhauling airports, roads, and rail networks a priority.  U.S. infrastructure projects are tipped for extraordinary growth in 2017, creating prospects that I have encouraged Australian investors to pursue.

Already, Australian firms have made sizeable and successful investments.  IFM has a $10 billion U.S. dollar stake in U.S. road and energy projects.  And, Pratt Industries has invested $600 million U.S. dollars over the last three years, hiring 6,000 employees in 25 states.

Jobs are one of the many reasons why the Governors of the U.S. states of Nevada and Virginia visited Australia last year.  We know that the connections they made here will promote further trade, investment, and collaboration in 2017.  Five state delegations will participate in the Avalon airshow, and, I predict we will see many more U.S. state representatives and local lawmakers making the trip across the Pacific.

My colleagues and I at the U.S. Embassy and Consulates in Australia want to do even more to foster partnerships between U.S. and Australian companies.  Over the last six months, I have visited Adelaide, Darwin, Melbourne, Perth, Sydney, and now Brisbane, often in the company of U.S. business representatives.  I have met with the business community in all these places, and I have seen the real benefits of cooperation.  My entire Mission plans even more economic and commercial outreach in 2017.

Everything I’ve seen on my trips reinforces my view that America and Australia will continue to be strong economic partners because of the trust, confidence, and optimism we have in the strength of each other’s economies – and people.  I expect this to remain the case over the next year, and for the next 100 years.

One reason for my optimism is that we are both nations of innovators and risk-takers.  Innovation is forging new connections and taking our cooperation to an even higher level.  For example, Lockheed Martin will open its first research and development center outside the United States in Melbourne next month.  And, our scientists, research centers, and universities are engaged in joint initiatives in science, health, and the environment that will change the way people live – not just in our countries, but across the globe.  I feel safe predicting that this will continue in 2017 and beyond.

In addition, we are partners in the development of 21-century energy solutions; hydro, wind, solar, geothermal, and wave energy technologies, as well as biofuels.  In 2017, biofuels developed in Queensland will help power the U.S. Navy’s Great Green Fleet.

Biomedical research is another area benefiting enormously from U.S.-Australia innovation and cooperation.  Most recently, the U.S. National Institutes of Health has joined forces with the National Cancer Institute and Bioplatforms Australia, Macquarie University, Children’s Medical Research Institute, and the Garvan Institute of Medical Research to support former Vice President Biden’s Cancer Moonshot Initiative.  Through multiple and extensive research partnerships and better information sharing, the aim is to defeat cancer.  Maybe not in 2017, but it will happen within the next decade thanks to this cooperation.

Most thrilling, however, is what the future holds in outer space.  U.S.-Australia cooperation in space exploration began with the Apollo program in the 1950s and has grown astronomically.  CSIRO and NASA scientists working together at the deep space complex near Canberra put rovers on Mars.  We sent New Horizons to Pluto.  We put Juno into orbit around Jupiter.  And, together, we will send humankind to Mars.

Our mission to Mars is one of the greatest human endeavors in history.  Why is Mars so important?  Putting an astronaut on Mars is a major milestone in human spaceflight.  It represents the combined scientific and technological knowhow of some of the most brilliant minds on this planet.  As JFK said of the moon mission, it will “measure the best of our energy and skills.”

And, Mars is important because building our capabilities in outer space contributes to making life better on Earth.  Getting to Mars will force us to invent new ways to conserve water and improve fuel efficiency.  Advanced manufacturing and emerging technologies will not only produce our future spacecraft; they will give birth to new industries and new jobs.

Of course, we won’t reach Mars in 2017, but together we are beginning the journey.  New satellite dishes inaugurated last year at Tidbinbilla are critical to Mars mission communications.  They are part of NASA’s $20 million U.S. dollar annual investment in Australia.  NASA-CSIRO cooperation will be on display at the International Aeronautical Congress in Adelaide in September.

Our cooperation in energy, health, and outer space may grab the headlines, but look a little deeper and you will find strong, ongoing collaboration across a wide range of fields.  A broad science and technology cooperation agreement was recently renewed; and unlike its predecessors will not require renewals every 10 years.  Like our alliance, it has no end date.  The scientific endeavors it facilitates are near limitless.  From fisheries to biometrics; from quantum computing to firefighting; from air services to reducing the nuclear threat; we continue moving forward together.

Our momentum is unstoppable.

Some commentators have suggested that the Trump administration will be isolationist, or over-aggressive.  Or that the United States can no longer be depended upon as a reliable trade partner or ally.  In response, I ask you to look at the reality on the ground.  Consider what has actually happened over the past decades and in the past month.  Examine the specific actions and policies of senior U.S. leadership.  If you do so, I think you will agree that the alarmist concerns reflect a very small set of data points when compared with the overwhelming body of evidence.  It is clear to me that America will continue to be a global leader and Australia’s best partner.

So, yes, I am confident.  Not because of some naïve optimism, but on the basis of our multiple, overlapping, shared interests, some of which I outlined today.  I am confident that my country will continue to play a positive role in Asia.  I am confident U.S.-Australia ties will remain deep and broad.  I am confident the alliance will evolve and grow even stronger.  I am confident our alliance will stand the test of time.

Thank you to CEDA for bringing us together today.  I am looking forward to our discussion.

Thank you.

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