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Not the Asian Century White Paper

Tomorrow the Prime Minister will launch the Australia in the Asian Century White Paper. This document, which will plot a way forward for Australia in what is already considered to be the “Asian Century”. It will act as the government’s version of a SWOT analysis. The paper will examine the real internal strengths of Australia and external factors that lead that do contribute to our strengths as we continue to engage in the region. The paper will also look at our weaknesses in terms of trade in particular, but also security. The paper will look at the opportunities for Australia in the Asian century, with whom we can engage more to our benefit. Finally, the document will also look at the threats in the region.

In a way, the Asian Century White Paper is behind the times. Trade with Asia already makes up about 70% of Australia’s international trade. This makes it appear clear, as do public statements, that the blueprint is more about the rise of China and to a lesser extent India, than it is about looking at the strengths, weaknesses, opportunities and threats that exist in the Asia-Pacific area. As such, the possibilities of greater relations with the “Asian Tigers” and rapidly growing Asian economies will likely not receive much press.

This examination will look mostly at the bilateral activities Australia undertakes currently, could enhance or could begin to participate in and less at the specific domestic policy directions necessary to cope with living in a strong and prosperous Asia.

Undoubtedly, the Asian White Paper will say that China is the country, above all others to focus our energies on. You would be hard-pressed to find many who would say otherwise. We need China and they need us. Our commodities are prized by China and we source cheap goods from the Asian powerhouse, now the second biggest economy in the world after overtaking struggling Japan. To this end, concluding Free Trade Agreement negotiations with China is an absolute must.

Some will have you believe that China also serves as one of the great uncertainties of the Asian Century.  “Reds under the beds” is not a worry that should be occupying the mind’s of our people. China’s continued growth will almost certainly be one of peaceful empire. Their growth is because of the embrace of market economics and China is communist in name and some aspects of internal behaviour only. The military build-up in China is entirely consistent with the growth of the country as a world power and countries like the United States of America have nothing to fear except for loss of economic dominance. 

In terms of Japan, our second largest trading partner, the future of the economic relationship at least is not as certain. The economy of Japan has been battered by high levels of debt, natural disasters and unstable economic leadership. In saying this though, the relationship with the nation of islands should be maintained with caution and buttressed by increasing economic cooperation with other nations in the region. However, it is in our interests to continue to proceed with free trade negotiations with the Japanese.

Trade relations with South Korea continue to be strong with the nation, as of 2011, being our 3rd biggest export market. We have commenced Free Trade Agreement negotiations with Korea, but the discussions have hit the final hurdle. The agreement was supposed to have been concluded by now, but negotiations are ongoing.

Our next biggest market, is also our second biggest opportunity as the growth of Asian economies explodes. That nation is India. This is a nation with economic growth to rival that of China. While India is not in a position to rival China in terms of the size of her economy, India does provide opportunities. This includes, somewhat contentiously, uranium exports which are now being negotiated and also the restoration of Indian confidence in Australia’s safety for the large overseas student and tourism market the nation of the subcontinent can and has provided. Finalising the Australia-India Comprehensive Economic Agreement is also a necessary step in continuing to open up India to Australia and vice versa.

There are other nations of Asia in the list of our top 10 training partners too. In fact, Asian countries make up more than half of those nations. Also in the top 10 is Taiwan, Singapore and Thailand. With both Singapore and Thailand we have established Free Trade Agreements. However, in the case of Taiwan, there is no economic agreement being negotiated, awaiting approval or in force. Perhaps an opportunity lies there, perhaps we are frightened to pursue one for fear of causing China offense or perhaps our priorities are not mutual.

There are also other Asian states that are outside of the 10 biggest Australian trading partners with which we have already or are in the process of negotiating or approving FTA’s. There is an ASEAN-Australia-New Zealand Free Trade Agreement which includes Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Singapore, the Philippines, Thailand and Vietnam. This includes nations such as Singapore, Thailand, Indonesia and Malaysia with whom we either have individual FTA’s or are in the process of either negotiating or seeking domestic approval for.

In a broad sense, continuing to pursue the recently commenced negotiations over the Trans-Pacific Partnership Agreement is also a must and will only enhance economic relations with both Asia and other parts of the world.

So in terms of economic cooperation in the Asian region and into the Asian century, the task is not really to establish new markets, but rather to consolidate and build upon those already available to Australia. In the case of the services sector in particular the task is returning it to the vitality we know. Particularly in the case of tourism this will be a lot easier when the price of the dollar lowers and economies recover.

In terms of economic engagement with Asia and the focus that it is given, it is a positive but has the potential to be a negative from time to time. Putting too many eggs in the Asian basket might expose us to regional shocks. So far, with the economic activities we undertake in Asia though, we have managed to avoid major damage to our economy when other countries in the Asia-Pacific have not been spared. But the possibility of exposure to risks should still be in the front of the mind’s of our policy-makers.

New Zealand and the other Pacific Island nations must also factor into the Asian equation. They are as much a part of Asia as we are. New Zealand is our greatest ally in the Asia-Pacific region, a long-term friend and economic partner and we will continue to share and grow our economic relationship and broader bilateral relations with her.

In terms of security, the most volatile place in the Asian region, the place that has the potential to most impact on our security, is Indonesia. Enhancing current cooperation with Indonesia on counter-terrorism efforts is a must. However, this must not be at the expense of combating homegrown terrorism on Australian soil.

It is certain that we will be seen to be deeply connected with the USA . We can, will and should make clear that our actions in the region will be peaceful and aimed at trade and our ongoing security, rather than offensive actions and manoeuvres that constitute a threat.

In terms of China, as stated earlier, it has been quite easy for some to classify the economic growth and consequential militarisation of China as a threat. This eventuality though, as stated before, appears hard to fathom. On the other hand, disputes involving China and her nearer neighbours, currently festering, do have the potential to develop into problems for those nations. By and large, these are conflicts Australia can remain independent of.

With regard to people movements, Indonesia as well as Sri Lanka and Malaysia will remain central to our efforts in cutting down on irregular people movement. We would be foolish to ever imagine that we as a country or even the wider Asian region could solve the complex issue that is asylum seeker movements.

Later on in the Asian century it is also reasonable to keep in mind the potentially significant movement of people in our region brought about by climate change. The scale of this is hard to calculate, but the prospect must be factored into equations. Australia as a rich and prosperous country would be expected to take up the majority of the resettlement burden in such circumstances.

Overwhelmingly the opportunities for Australia in the Asian Century are good. The positives far outweigh the negatives. We must however be careful of too much dependence on the region and too much nation specific interaction within the Asia-Pacific.

We must think, for the century ahead, well beyond commodities and to sources of renewable energy. An ongoing and healthy services sector is also a must as resources begin to diminish.

There is the possibility of regional instability, but much of that should not have consequences for Australia. The major threat will continue to be terrorism with hatred fomented and potential non-state actors trained in Indonesian camps in particular.

We will be seen as one of America’s deputies in the Asia-Pacific, along with South Korea and Japan as well as New Zealand to some extent. In reality though, this should not colour the way we interact in our geographical region nor the way in which our peaceful advances are received.

People movement will continue to be something Australia experiences for as long as there is security and economic concerns in nations around the world. Later in the century this will probably be exacerbated by climate change, particularly in the low-lying areas of the Asia-Pacific.

Australia must not be happy with the status quo. Moving towards greater engagement and cooperation not just in Asia, but the world, is the answer to making the most of the opportunities and the threats that we and the region already experience and may encounter in the future.

Neglect, Soft Diplomacy and Great Possibilities

Finally, after years of discussion about the importance of economic and stronger diplomatic ties with India it appears that all the talk has transformed into action. Prime Minister Julia Gillard, on a trip to India today announced that Australia would seek to give the relationship with India the same level of attention and significance as ties with Japan, Korea and Indonesia. Relations have been held back recently, including over a reluctance on Australia’s part, until recently, to sell uranium to India and also as a response to a number of violent attacks on Indian students.

There is no doubt that India, the second largest country by population and world’s largest democracy can be the source of abundant opportunity, economically and culturally. But the benefits of a greater engagement with India are not one way, greater trade and engagement will be mutually beneficial if harnessed to their full potential.

At present the relationship is worth close to $20 billion to Australia and in beginning bilateral free trade talks with the south-Asian country, the Trade Minister, Craig Emerson signalled intentions to double that figure to $40 billion. The intentions there are great and working towards that outcome is an important process that needs to be facilitated.

As part of the trip so far, a headline-stealer above and beyond anyone of the economic issues so far, was announced by Julia Gillard. The Australian Government would be conferring membership of the Order of Australia on Sachin Tendulkar.

It is unclear what benefit this act of ‘soft diplomacy’ will have as we pursue more mutual interests with the subcontinental nation. If anything, the benefit will be the temporary winning of brownie points as we seek to increase our cultural and trade ties with India. To that end, it is useless if not back up with firm and substantial commitments to further the bilateral arrangements between Australia and India.

The journey to India is all about catching up on lost time in the relationship between our two countries. For too long it has been pushed too much to the side, even not pursued at times, especially in the wake of acts of violence on Indian students which were quickly characterised in the media here and in the subcontinent as acts of racial violence.

Far from just focusing on the temporary and largely superficial effects of giving Sachin Tendulkar an honour usually reserved for Australians and the dubious and troublesome trade in uranium, an equal focus on trade in a broader range of commodities and on the services side of our economy is entirely necessary.

India too has much to offer, not the least of which is a well-educated and competitively-priced technology sector.

It has been claimed that the pursuit of greater bonds with India is to act as a counterbalance in the region to the rise of China which, while entirely peaceful, has drawn varying levels of concern from different countries.

Frankly, that is absolute nonsense. Trade with India will in no way have any effect, positive or negative, on the relationship with China. Yes, both India and China have different forms of government, but that just does not play as a factor in necessary trading relationships.

There will also be no time, even in the most distant future where India would eclipse China in economy size.

If we are to further ties with India, then what was described today as a “standing invitation” for the Indian Prime Minister to travel to India will need to become a formal invitation asking Mr Singh to visit Australia. It has been far too long, nearly 26 years in fact, since the last visit of an Indian leader to our shores.

There is much work to be done in the relationship with India and the task is made harder because of the indifference and at times outright lack of interest in growing the limited economic and friendship ties between our two nations. The misaligned tyres from hitting potholes encountered along the way have also been neglected for too long and what could have been an easy repair job were their immediate attention, now requires a look at the axles.

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