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1301.0 - Year Book Australia, 2004  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 27/02/2004   
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Contents >> International relations >> Australia’s bilateral relationships

Australia is a Western country located in the Asia-Pacific region, with close ties and affinities with North America and Europe, and a history of active engagement throughout Asia.

As a nation with global interests, Australia has important links with all regions of the world. The countries which engage Australia's interests most substantially are those which influence its strategic and economic environment. Australia seeks to make the most of its bilateral relationships, regardless of geography, and develops functional affinities with countries and groups of countries with which it shares specific interests. An advance in any one relationship need not be at the expense of others.

United States of America

The United States of America is Australia’s most important economic partner and closest security ally. It is the world’s largest economy, leading trading nation, leading military power, and primary source of technological innovation. The relationship complements and reinforces Australia’s practical commitment to the Asia-Pacific region, where the United States of America’s engagement is fundamental to the region’s security and prosperity. The bilateral relationship is underpinned by a program of high-level visits and consultations. The Australian Prime Minister visited the United States of America twice in 2003, and the President of the United States of America also visited Australia.

Australia's strategic alliance with the United States of America is formalised in the ANZUS Treaty, concluded in 1951. Australia and the United States of America cooperate closely in a range of areas to promote their own security and to contribute to broader regional and global security. The ANZUS Treaty was invoked by Australia for the first time in response to the terrorist attacks of 11 September 2001.

The shared strategic interests and values of Australia and the United States of America are complemented by dynamic trade and investment links. The United States of America is Australia’s largest trading partner in terms of goods and services. A bilateral Free Trade Agreement (FTA) is under negotiation. This presents a unique opportunity to improve access to the United States of America market for Australian exporters and more closely integrate the economies of Australia and the United States of America. People-to-people ties, including educational and cultural links, are extensive and wide-ranging.

Japan

Japan is the world's second largest economy and, as such, plays a primary economic and political role in our immediate region. Australia conducts close dialogue with Japan on a wide range of economic, political and strategic issues. This wide-ranging contact has enabled the strengthening and deepening of a bilateral relationship founded on many shared interests. Japan is Australia's second largest individual trading partner, accounting for 14% by value of the total goods and services trade. It is a substantial investor in Australia and its second largest source of in-bound tourism behind New Zealand.

Like Australia, Japan supports the long-term strategic engagement of the United States of America in the Asia-Pacific region. It also has a bilateral alliance with the United States of America. Japan shares our interest in advancing Asia-Pacific Economic Coorporation (APEC) as a primary vehicle for regional economic cooperation. During the Australian Prime Minister’s visit to Japan in July 2003, the Australian and Japanese Prime Ministers signed the Australia-Japan Trade and Economic Framework. The Framework includes a commitment by the two countries to work towards trade and investment liberalisation on a comprehensive basis through various avenues.

China

China’s importance to Australia has grown along with China's increasing economic, political and strategic engagement with the Asia-Pacific region and the global economy. China's relations with the countries of the Asia-Pacific region, particularly Japan and the United States of America, play a vital role in shaping the security context for the region. Australia encourages and supports Chinese participation in organisations which promote dialogue and cooperation on regional security issues. The bilateral relationship has matured and broadened to encompass dialogue and exchanges across a range of interests, further strengthened by a strong program of recent high-level visits in both directions.

Over the last decade, China has moved from being the tenth to the third largest partner in trade in goods and services with Australia, and the trade and investment relationship is expanding. Underpinning economic ties is Australia's long-term strategic energy partnership with China, including Australia's successful bid for the $25b, 25-year contract to supply liquefied natural gas to China’s Guangdong Province. Australia and China have agreed to negotiate a framework agreement which will explore opportunities to broaden and deepen the economic relationship.

Within the parameters of the one-China policy, Australia also pursues important economic and trade interests with Taiwan, its tenth largest trading partner in goods and services.

Indonesia

As one of Australia's nearest neighbours, Indonesia has long been one of its most important bilateral relationships, encompassing political ties, trade and investment, people-to-people links and cultural exchanges. The breadth of the relationship is one of its strongest attributes, with strong education and tourist links supporting an increased understanding of both countries. Australia also maintains a large-scale bilateral program of economic, technical and humanitarian assistance to Indonesia. Indonesia is Australia's ninth largest trading partner in goods and services.

Productive, high-level head-of-government and ministerial contact in recent years has helped Australia and Indonesia work together on regional challenges. The cooperation with Indonesia to investigate the October 2002 Bali bombings is a clear indication of both nations’ commitment to cooperative, mutually-beneficial engagement and to combating terrorism. Australia and Indonesia have also co-hosted regional conferences on people-smuggling and on money laundering and terrorist financing.

Korean Peninsula

Relations between Australia and the Republic of Korea (ROK) have become increasingly complementary and productive in recent years, reflecting a growing commonality of interests, shared emphasis on the importance of the Asia-Pacific region and mutual recognition of the benefits of close cooperation. The ROK is Australia’s sixth largest trading partner in goods and services and third largest export market.

Australia is active in support of attempts to resolve tensions on the Korean Peninsula, particularly after a series of escalatory steps by the Democratic People's Republic of Korea (DPRK) over its nuclear weapons program. Australia has been in close contact with key players (China, the DPRK, Japan, the ROK and the United States of America) to bring about a resolution. In January 2003, a delegation of senior Australian officials visited Pyongyang and registered firmly Australia’s and the international community’s deep concern about the DPRK's nuclear brinkmanship. Australia resumed diplomatic relations with the DPRK in May 2000 and the DPRK opened an embassy in Canberra in May 2002. The embassy has been a valuable channel to continue dialogue with the DPRK.

Association of South East Asian Nations (ASEAN)

ASEAN is the key regional political institution in South-East Asia and has been instrumental in promoting regional political harmony and stability for over 30 years. Australia values greatly its close relationship with ASEAN as a grouping, and with its member states (Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam). Australia cooperates with ASEAN countries on a range of issues including terrorism and transnational crime. Trade, investment, education, development cooperation and people-to-people links are strong. The Closer Economic Partnership between ASEAN and Australia and New Zealand aims to reduce and remove impediments to trade and investment and lower business costs. Australia is also involved in the ASEAN Regional Forum, which promotes regional security dialogue and confidence building, as well as the ASEAN Post-Ministerial Conference. Australia's trade with South-East Asia accounted for 14% of total trade in goods and services.

East Timor

As the world's newest nation and a close neighbour, East Timor is important to Australia. Australia worked closely with the United Nations (UN) and the East Timorese people in support of East Timor's stable transition to independence in May 2002, and continues to play a leading role in the UN post-independence mission in East Timor. Australia and East Timor signed the Timor Sea Treaty which provides an equitable basis for development of oil and gas resources in the Timor Sea. The Treaty will promote stability and economic development for East Timor. Australia is also one of East Timor's largest aid donors.

New Zealand

Australia and New Zealand have traditionally been natural allies, with migration, trade and defence ties helping to shape the relationship. People-to-people links are strong; more than a million Australians and New Zealanders crossed the Tasman Sea in 2002, as tourists, for business purposes, or to visit family members. The Australia New Zealand Closer Economic Relations (CER) Trade Agreement, which creates a free-trade area between the two countries, celebrated its 20th anniversary in 2003. Since the inauguration of the CER, two-way trade with New Zealand has greatly expanded. Australia is New Zealand's principal trading partner and the trans-Tasman trading relationship is Australia's fifth largest. At a government-to-government level, the bilateral relationship is more extensive than with any other country. The respective prime ministers hold formal talks frequently; foreign ministers meet biannually; and talks between treasurers and defence ministers are held annually.

The South Pacific

Australia has a strong interest in the stability and economic viability of the island states of the Pacific. These countries face significant development challenges and, in some cases, political instability. Australia is the largest donor of development assistance to the South Pacific and is a major trade and investment partner for these countries. Australia supports local efforts to advance development and, where necessary, restore stability, in cooperation with other countries and institutions that have a long-term interest in the region.

Following a request for help from the Solomon Islands' Government in 2003, Australia is overseeing the implementation of a strengthened assistance program to achieve progress in addressing severe security and economic problems. This package is a unique initiative involving contributions from a number of South Pacific governments and the deployment of police, military and civilian personnel.

Australia pursues a close, constructive and friendly bilateral relationship with Papua New Guinea aimed at promoting political stability, effective governance and economic self-reliance there. The Australian-led Peace Monitoring Group in Bougainville wound up in 2003, but Australia continues to support the peace process in the province by leading and providing civilian personnel to the smaller Bougainville Transition Team.

Europe

Australia's ties with the countries of Europe and the EU are extensive, covering economic engagement and security cooperation, and are underpinned by strong people-to-people links. The EU is an increasingly influential force in international affairs, with its membership set to increase from 15 to 25 countries in May 2004. Among EU members are some of the world's largest economies, including Germany, the United Kingdom, France and Italy. The EU carries enormous economic weight. Considered as a single entity, the EU accounts for 19% of Australia's total trade in goods and services. In 2003, Australia and the EU adopted a five-year action plan, which provides a practical framework for cooperation across the bilateral relationship.

Australia has a particularly important relationship with the United Kingdom, based on vibrant trade and investment links, close alignment of security interests and shared values and history. In 2002, the United Kingdom was Australia's fourth largest trading partner in goods and services. It is also the second largest single country investor in Australia and the second largest destination for outward investment from Australia.

The key central and eastern European markets for Australia are Russia, Poland, Hungary, the Czech Republic and Romania, while the smaller transition economies (Slovenia, the Slovak Republic and Bulgaria) also offer trade opportunities for Australia. Australia's relations with these and other regional European countries have developed steadily in recent years, and will continue to do so as many of them prepare to become members of the EU.

South Asia

India is growing in political, strategic and economic importance in global and regional affairs and is an increasingly important dialogue partner for Australia. Trade, investment and education links are expanding steadily. Long-standing tensions between India and Pakistan pose a significant threat to peace and security in the region. Australia contributed to international diplomatic efforts to prevent armed conflict between India and Pakistan in 2002. Tensions have since eased and Australia has joined others in the international community calling on India and Pakistan to work towards a negotiated settlement of their differences.

Following its participation in the US-led international intervention in Afghanistan against the Taliban regime and the associated al-Qaeda terrorist network, Australia is contributing to humanitarian and reconstruction assistance for Afghanistan.

Canada and Latin America

Australia's relationship with Canada is mature, productive and broadly based. The two countries have been trading for more than 100 years and established formal diplomatic links over 60 years. In addition to the active trade and investment relationship, Australia and Canada cooperate closely on international security, trade and environmental issues.

The size and diversity of the markets in the Latin American region offer significant opportunities for Australian exporters and investors, and trade and investment has expanded in recent years. Australia also pursues productive relationships with Latin American countries on a range of international political, trade liberalisation and economic issues.

The Middle East and Africa

The Middle East is an area of strategic importance whose security issues engage the rest of the world, including Australia. Australia participated in the international coalition to disarm Saddam Hussein and liberate the people of Iraq, and is contributing to efforts to meet the humanitarian and longer-term reconstruction needs of the Iraqi people. Australia also has growing commercial interests in the Middle East, a significant destination for Australian agriculture, services and manufactured exports. The Middle East has been the fastest growing regional market for Australian exports over the past decade.

Australia's most significant relationship in Africa is with South Africa, which is an important market for Australia's commercial interests and provides a base for trade with all the countries of the Southern African Development Community. Australia is a strong supporter of the International Monetary Fund/World Bank Heavily Indebted Poor Countries initiative as the most credible way to provide sustainable debt relief, especially in Africa. Australia also engages with African states through our membership of the Commonwealth and the UN.


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