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FM AMEMBASSY CANBERRA
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RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBJ/AMEMBASSY BEIJING 9750
RUEHNE/AMEMBASSY NEW DELHI 1237
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UNCLAS SECTION 01 OF 02 CANBERRA 000121 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR S/SRAP (Mary Beth Goodman and Robert Deutsch) 
 
E.O. 12958: N/A 
TAGS: ECIN PREL ECON AS
SUBJECT: AUSTRALIA: CONFERENCE ON SOUTH ASIAN ECONOMIC INTEGRATION 
 
¶1. (SBU) SUMMARY:  An academic conference examined East Asian 
development models for application to South Asia.  Experts concluded 
that without further reform, neither the Chinese nor the traditional 
western development model may be appropriate for South Asia. 
Conference attendees stressed the constructive role the G20 can play 
in South Asian development.  Australian Trade Minister Crean 
emphasized support for trade capacity building.  While little 
integration has thus far taken place among South Asian economies, 
momentum for change is growing.  END SUMMARY. 
 
Looking for the Right Development Model 
---------------------------------------- 
 
¶2. (SBU) Regional experts discussed prospects for Asian economic 
integration at an Australian National University conference on 
February 11-12, 2010.  South Asian trade, especially inter-regional 
trade, is surprisingly low due to political and regulatory barriers. 
 Bilateral trade between India and Pakistan in recent years has 
amounted to only USD1-2 billion.  Participants discussed whether 
countries such as India, Pakistan or Sri Lanka should adopt 
development models fashioned after the Washington or Beijing 
"consensus."  Early reforms adopted along these lines in the 
Philippines and Pakistan were ultimately reversed by subsequent 
regimes. 
 
¶3. (SBU) Comparisons between Chinese and Indian growth noted the 
comparatively small size of Indian manufacturing (around 15% of GDP) 
and the role of residual regulations in constraining manufactured 
exports, where China retains a lead.  This regulatory problem will 
become significant as 200 million more Indians join the labor market 
by 2020.  As a result of its resistance to allow the vast rural 
movement of labor to the cities that has occurred in China, Indian 
economic adjustment will likely be more difficult than in China. 
 
¶4. (SBU) South Asia is making progress on economic and structural 
reform, but the pace of change differs significantly between 
countries.  India has embraced gradual reform but trade barriers 
remain.  Peking University Professor Yiping Huang stressed the need 
for a "clear policy" approach, instead of a 5-year plan, and 
political will for reform.  Huang said the Chinese economic 
development plan, far from being a detailed plan, consists of a 
gradual approach that is interspersed with policy adjustments which 
address problems as they arise. 
 
Trade Capacity Building 
------------------------ 
 
 
¶5. (SBU) Australian Trade Minister Simon Crean addressed the 
conference and described a new Australian policy nexus between aid 
and trade, which views investment in "trade capacity building" (TCB) 
as a major component.  TCB aims to assist developing economies with 
trade negotiations and subsequent "behind-the-border" reform 
measures that will increase the benefits from opening new markets. 
Crean said Australia incorporated TCB into the recent FTA between 
Australia, New Zealand and ASEAN.  Director of the Australian Agency 
for International Development (AusAID) Edward Archibald confirmed to 
Econoff there is now closer interaction between Austrade, 
Australia's trade promotion agency, and other aid agencies, though 
more is needed. 
 
A Role for the G20 
-------------------- 
Q-------------------- 
 
¶6. (SBU) Indian Professor Rajiv Kumar called for a greater 
institutionalization of the G20 and the creation of a secretariat to 
facilitate its economic role, which could extend into development 
policy.  Indonesian Trade Vice Minister Mahendra Siregar also called 
appealed for the G20 to become a vehicle through which to overcome 
crises and more easily allow structural adjustment in both developed 
and developing countries.  He noted that Indonesia is sympathetic to 
discussion of financial matters related to climate change, despite 
BRIC (Brazil, Russia, India, China) opposition to such a discussion. 
 
 
¶7. (SBU) Deputy Secretary for Department of the Prime Minister 
Gordon de Brouwer is closely involved with the G20 and underscored 
to Econoff Australia's support for the more inclusive G20 
architecture and its ability to react faster to crises than global 
institutions which are "too slow and bureaucratic."  De Brouwer 
suggested the G20 can help advance development goals through its 
 
CANBERRA 00000121  002 OF 002 
 
 
role as a catalyst for policy improvements in other fora, which 
could include development policy. 
 
¶8. (U) Comment:  Most scholars at the conference seemed to agree 
that the adoption of various reforms by some South Asian governments 
has led to a consensus in favor of reform among their populations, 
which should help make the momentum for reform self-sustaining. 
 
BLEICH