1301.0 - Year Book Australia, 2005  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 21/01/2005   
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Contents >> International relations >> Australia’s bilateral relationships

Australia has important links with all regions of the world. Australia’s size, location and history ensure that it will continue to foster significant relationships with a diverse range of countries on the basis of shared interests. The countries which engage Australia’s interests most substantially are those which have the greatest influence over our strategic and economic environment.

United States of America (USA)

The USA is among Australia’s most important economic partners, and its closest security ally. Australia’s close economic and strategic ties with the USA reflect the latter’s position as the world’s largest economy and leading military power. The relationship complements and reinforces Australia’s practical commitment to the Asia-Pacific region, where the USA’s engagement is fundamental to the region’s security and prosperity. The Australian Prime Minister visited the USA in June 2004, following a visit to Australia by the President of the USA in October 2003.

Australia’s strategic alliance with the USA is formalised in the ANZUS Treaty, concluded in 1951. The two countries cooperate closely to promote their own security and to contribute to broader regional and global security. Australia-United States Ministerial Consultations are held between foreign and defence ministers annually. In 2004 Australia worked closely with the USA to bring about an international response that would support Iraq’s transition to self-government. Bilateral cooperation on countering terrorism and combating the spread of weapons of mass destruction was strengthened.

In 2003 Australia exported goods and services worth $9b and $5b respectively to the USA, making it Australia’s second largest export destination. Major Australian merchandise exports to the USA were meat, alcohol and crude petroleum. The successful conclusion of the Australia-US Free Trade Agreement in 2004 will support further growth in two-way trade and investment. People-to-people ties, including educational and cultural links, are extensive and wide-ranging.


Australia’s close relations with Japan are built on long-established common interests. Both countries are industrialised democracies, both share a commitment to prosperity and stability in the Asia-Pacific region, and both are key allies of the USA. Mutual security interests underpin current, enhanced cooperation on issues such as counter-terrorism and combatting the proliferation of weapons of mass destruction. The Australia-Japan Foundation, an Australian Government authority established in 1976, fosters relations between the people of Australia and Japan.

Australia’s trade and investment relationship with Japan - the second largest economy in the world - is of fundamental importance. Japan has long been Australia’s largest export destination, and in 2003 Australia exported goods and services worth $20b and $3b respectively to Japan. The major merchandise exports were coal, liquefied natural gas, iron ore, beef and aluminium. Total stock of Japanese investment in Australia was $48b as at 30 June 2003, making Japan the third largest source of investment in Australia.

The Australia-Japan Trade and Economic Framework, signed by the Prime Ministers of Australia and Japan in 2003, includes an undertaking by the two countries to work towards comprehensive and balanced trade and investment liberalisation, and reflects both countries’ commitment to developing further their economic relationship.


Australia’s relationship with China seeks to maximise shared economic interests, advance Australia’s political and strategic interests, and manage differences in a sensible and practical way. China’s importance to Australia has grown with China’s increasing economic, political and strategic engagement with the Asia-Pacific region and the global economy. Bilateral relations reached a new level of maturity with reciprocal visits by Prime Minister Howard and President Hu in 2003, and the signing of the Australia-China Trade and Economic Framework during President Hu’s visit. The Framework will provide a foundation for closer commercial relations between the two countries, including through a joint feasibility study for a bilateral free trade agreement, currently underway.

Two-way trade has increased significantly over the past decade, and China is now Australia’s third largest export destination. In 2003 Australia exported goods and services worth $9b and $1b respectively to China. Major Australian merchandise exports to China were iron ore, wool and crude petroleum.

Australia undertakes human rights advocacy in its official dialogue with China. The Australia-China Council plays a significant role in broadening and deepening Australia’s cultural relations with China.

Within the parameters of the one-China policy, Australia also pursues important economic and trade interests with Taiwan.


Australia’s bilateral relationship with Indonesia encompasses a wide range of interests, including political ties, trade and investment, people-to-people links, education, tourism, development cooperation and cultural exchanges. High-level government-to-government contact in recent years has strengthened bilateral cooperation on a range of important issues, including countering terrorism and people smuggling. Australia is committed to assisting Indonesia’s economic and social development; Indonesia was the second largest recipient of Australian aid in the budget for 2004-05. In support of Indonesia’s democratic development, Australia has provided capacity building and training assistance to the Indonesian Election Commission and sent observer missions to Indonesia’s presidential and parliamentary elections in 2004.

The Australia-Indonesia Ministerial Forum - established in 1992 - provides a key platform for the two governments to expand bilateral economic ties. In addition, an Australia-Indonesia Trade Ministers’ Meeting takes place annually. Indonesia is Australia’s tenth largest export destination, with exports of goods and services valued at $2.8b and $1b respectively in 2003. Australia’s major merchandise exports to Indonesia are cotton, aluminium and live animals. Australia is also a major exporter of education services to Indonesia, with over 17,000 Indonesian students studying in Australia.

Australia promotes understanding and exchanges between the two countries through the Australia-Indonesia Institute.

Korean Peninsula

Australia continues to strengthen its relationship with the Republic of Korea (ROK), with a focus on trade and investment and cooperation to bring about a nuclear-free Korean Peninsula. Australia established the Australia-Korea Foundation in 1992 to develop contacts between the people of Australia and the ROK. For many years, Australia's commodity exports underpinned the ROK's rapid industrial growth. Australian liquified natural gas is set to be a strategic energy source for the ROK's future growth, and links in information technology and services trade are rapidly developing. In 2003 the ROK was Australia’s fourth largest export destination, with exports of goods and services valued at $8b and $1b respectively. Major Australian merchandise exports to the ROK are coal, crude petroleum and non-monetary gold.

Australia resumed diplomatic relations with the Democratic Peoples Republic of Korea (DPRK) in 2000, but further development of that relationship is on hold pending progress by the DPRK on dismantling its nuclear weapons program.


Australia attaches priority to its relationship with ASEAN - which is the key regional institution in South-East Asia. ASEAN’s membership is comprised of Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Australia cooperates closely with ASEAN on issues of regional importance, including trade and investment, countering terrorism and transnational crime. Australia is involved in a number of important ASEAN dialogues, notably the ASEAN Regional Forum which is aimed at promoting regional security and confidence building, and the ASEAN Post Ministerial Conference.

In 2004 the 30th anniversary of Australia’s dialogue relationship with ASEAN, Australia hosted a visit by the ASEAN Secretary-General. The announcement, in April 2004, that ASEAN Economic Ministers supported development of a free trade agreement between ASEAN, Australia and New Zealand was a step forward for Australia’s relations with ASEAN. ASEAN invited the Prime Ministers of Australia and New Zealand to attend a Summit in November 2004.

Australia also attaches importance to its relations with individual members of ASEAN. Australia recently made significant and tangible progress towards economic integration with the dynamic economies of Singapore and Thailand through the successful negotiation of free trade agreements with those countries. The Singapore Australia Free Trade Agreement entered into force on 28 July 2003 and is subject to regular review. The first Ministerial review took place on 14 July 2004 and agreement was reached on a number of measures aimed at improving the benefits for businesses of both Australia and Singapore. Australia exported goods and services to Singapore worth $3.5b and $2b respectively in 2003, making Singapore Australia’s seventh largest export destination. Thailand is Australia’s 13th largest export destination, with exports of goods and services valued at $2.3b and $0.5b respectively in 2003. This should increase significantly when the Thailand Australia Free Trade Agreement (TAFTA) comes into force and over $700m of Australian exports to Thailand will benefit from immediate tariff cuts. TAFTA is expected to enter into force in January 2005, after the completion of parliamentary and regulatory processes in Australia and Thailand.

East Timor

Australia worked closely with the East Timorese people and the United Nations in support of East Timor’s stable transition to independence in 2002, and continues to play a leading role assisting East Timor’s development, including in the security sector. The 2002 Timor Sea Treaty between Australia and East Timor, which establishes a framework for the development of resources in the Timor Sea pending the settlement of permanent maritime boundaries, is delivering revenues to East Timor. In March 2003 Australia and East Timor signed an Agreement to underpin the development of the Greater Sunrise gas reservoirs in the Timor Sea. Negotiations on permanent maritime boundaries between Australia and East Timor commenced in 2004.

New Zealand

Australia and New Zealand share a close relationship based on common values and proximity. At the government level, Australia’s contact with New Zealand is more extensive than with any other country, with regular meetings between the prime ministers, foreign, trade and defence ministers and treasurers. In 2004 New Zealand hosted the inaugural Australia-New Zealand Leadership Forum, involving leaders from government, business and community groups, to explore ways to improve further trans-Tasman relations. People-to-people links are also particularly strong with over 1.8 million Australians and New Zealanders visiting each others' country annually.

Two way trade and investment takes place under the Australia New Zealand Closer Economic Relations (CER) Trade Agreement, which created a free trade area between the two countries in 1983. A number of new initiatives are being developed under the CER, aimed at further facilitating the free flow of trade between the two countries. New Zealand is Australia’s fifth largest export destination, with exports of goods and services valued at $8b and $2.3b respectively in 2003. Australia’s major merchandise exports to New Zealand are office machines and equipment, vehicles and refined petroleum. Australia is New Zealand’s largest trading partner.

The South Pacific

Australia has a strong interest in promoting the stability and economic viability of the island states of the Pacific, and is the largest provider of development assistance to the South Pacific. In 2004 Australia sought to play a more active role to improve security and governance in the region. Australia is leading the Regional Assistance Mission to Solomon Islands which has succeeded in bringing security quickly to the Solomon Islands and stabilising the budgetary situation. Australia has developed a new approach to its relations with Papua New Guinea (PNG), including through negotiation of a treaty to underpin the placement of Australian officials and police in PNG’s bureaucracy to help improve law and order, financial management, border security and transport security. Australia has also agreed to send officials to Nauru to help improve financial management and police performance.

For the first time, an Australian is serving as Secretary-General of the Pacific Islands Forum Secretariat.


Australia continues to deepen its relations with the European Union (EU), which had a population of 455 million and an economy comparable in size to the USA when it expanded from 15 to 25 member states in May 2004. Australia’s relations with the EU are underpinned by the Joint Declaration on Relations between Australia and the European Union of 1997, and the 2003 action plan Australian-European Union: an agenda for cooperation. Ministerial consultations between Australia and the European Commission are held annually. Australia also holds broad-ranging policy dialogues at ministerial level biannually with the EU Presidency.

Australia has close ties with many countries in Europe, with a focus on promoting strategic and economic objectives through high-level dialogue, trade negotiations and promotion, and development of bilateral agreements. The United Kingdom, Germany, Italy, France and the Netherlands are among the top 20 of Australia’s trading partners. Scandinavian countries and central European countries represent increasingly important markets for Australian education and other services. Australia and the United Kingdom share a particularly long-standing and vibrant relationship based on shared values and strong trade and investment, people-to-people and cultural linkages. The United Kingdom is Australia’s sixth largest export destination, with exports of goods and services valued at $7.4b and $3.8b respectively in 2003. In 2004 Australia increased its strategic and intelligence links with the United Kingdom through regular high-level discussions. Similarly, Australia increased bilateral exchanges with Germany and France on international strategic concerns and trade-related issues. Australia also has useful exchanges with a range of European countries on bilateral and multilateral issues. Australians of European descent from countries such as Italy, Greece, Turkey, Poland and Croatia also contribute to strong people-to-people relationships.

South Asia

India is the major power in South Asia, and has become an increasingly important partner for Australia as its role in world affairs has grown. The Australian and Indian governments conduct a regular Foreign Ministers’ Framework Dialogue and a senior officials’ Strategic Dialogue. Trade ministers of the two countries also meet regularly in a Joint Ministerial Commission to encourage the expansion of bilateral trade and investment. India is Australia’s 11th largest export destination, with merchandise exports valued at $3.3b in 2003. Australia established the Australia-India Council in 1992 to broaden and deepen bilateral contacts and understanding.

Australia maintains productive bilateral relationships with other countries of South Asia. It has contributed to international diplomatic efforts which paved the way for an easing of tensions between India and Pakistan over recent years. It has also contributed through the aid program to peace-building in Sri Lanka.

Following participation in the international military intervention in Afghanistan to oust the Taliban regime and the associated al-Qaeda terrorist network, Australia is making a significant contribution through the aid program to Afghanistan’s development.

Canada and Latin America

The Australia-Canada relationship is mature, highly productive and broadly based. Trade relations go back over 100 years, and formal diplomatic links are 60 years old. Historical parallels in social and cultural development have produced similar rules of law, government institutions and societies. In addition to an active trade and investment relationship, Australia and Canada cooperate closely on international security, trade and environmental issues.

Australia seeks to advance its relationships with Latin American countries, including through the Council on Australia Latin America Relations. The size and diversity of the markets in the Latin American region offer opportunities for Australian exporters and investors, and trade and investment have 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 and commercial importance to the rest of the world, including Australia. Australia participated in the international coalition to liberate the people of Iraq, and is implementing a rehabilitation strategy to assist the Iraqi people. The Australian Government's policy on Iraq is set out in the publication Iraq - the Path Ahead.

Australia’s commercial interests in the Middle East, particularly the Gulf States, are expanding, including in agriculture and services. Australia has been exploring options for a possible free trade agreement with the United Arab Emirates.

Australia’s most significant relationship in Africa is with South Africa, which is an important commercial market for Australian goods. Australia supports the International Monetary Fund/World Bank Heavily-Indebted Poor Countries initiative as an effective means of providing sustainable debt relief in Africa. Australia employs smart sanctions against Zimbabwe due to concern over the plight of the Zimbabwean people under the current government.

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