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.
Australia, way back over 200 years ago from the time of the First Fleet literally grew as a nation “on the sheep’s back”. As a nation Australia began to grow a broader agriculture sector which included a diverse combination of crops across particularly along the length of the eastern mainland states of Queensland, New South Whales and Victoria. That sector also included other animals in addition to sheep, with cattle and dairy farming playing a crucial role in the early economy.
Indeed agriculture does still play a crucial role in our economy albeit a much diminished one in recent decades with our comparative standing in various exports dropping markedly in some cases.
In the global community Australia is among the biggest exporters in the world of wheat, beef, wool and dairy and our three biggest exports are grain/oilseeds, meat and dairy that has obviously been the case for a prolonged period of time, given the industries on which Australia established itself as a fledgling colony and then nation state in the 1900s.
Agriculture in Australia now sits at only a 3% share of GDP in itself and last night Prime Minister Julia Gillard made a speech to the Global Foundation conference in Melbourne where Ms Gillard said she saw Australia becoming a foodbowl power, particularly in the Asia-Pacific region, where a rapidly growing population needs increasing access to a variety of different food imports.
The Prime Minister in her speech last night said that Australia should harness our potential in agriculture, like we did in the past and like the mining sector is now harnessing the potential of our vast mineral wealth.
There is certainly a space for Australia to grow its agriculture sector again, particularly when faced with an economy that at present is powering along on resources which are finite, but the way we do it and the markets and niches we seek to develop as a nation are a lot more intricate than just producing and distributing food across our region and the world.
Prime Minister Gillard in her speech to the foundation did acknowledge that Australia would have to focus its efforts, for the most part, on exporting food products which are value-added, rather than simply trying to up exports of foods that have not undergone the value-adding process.
Australia as a nation simply cannot compete with nations in the region on many basic fruits and vegetables which can be produced in similar climates around our region with much lower input and final product costs than we can achieve in Australia.
We would also tend to be seeking more niche and higher-end markets with our value-added production, thereby in a way limiting just how much we can grow the sector, but still an improvement.
We would have to focus on sending more goods from Australia to countries in our region like China, which is booming and will have a bigger middle class market, as well as countries like South Korea and Japan, even though the latter continues to struggle with economic woes both prior to and exacerbated by the horrific earthquake and tsunami event that destroyed so many lives and areas of the economy with it.
Far from just focusing on Asia, there is huge potential for our food exports to go elsewhere, particularly to the United States of America and Europe in a bigger way than at present and that is being worked on at present in a fairly big, if little discussed way.
There is also huge potential to continue to expand the market for our top class wine, with very few countries in the world producing truly exceptional wines, making this market a great hope for Australian producers. This market could be expanded and is beginning to be delivered to Asia and for that to continue would be a massive boon for the economy.
In a way, it seems that the speech the PM gave last night was a subtle way of saying, “hey, here’s a way that we can keep the decline of manufacturing somewhat at bay if we do more food processing in Australia”.
If we add the processing of food products to the agriculture sector of the Australian economy, we suddenly get a sector that is approximately 12% of Gross Domestic Product, a significant sector by any measure when the services sector takes up over 2/3 of the overall national economy on its own.
So Australia can definitely look to becoming a major food exporter to both the region and the globe. There are various challenges, not the least of which is a water shortage along the Murray-Darling Basin food bowl and this will mean that the challenge to grow our food exports will be a medium to long-term effort, rather than a rapid expansion, which would be difficult in itself anyway even if external factors didn’t exist.
The vision is there, but helping to move the idea to a reality will be a long and enduring process that will require the political will of governments of both political stripes to oversee its development.