1301.0 - Year Book Australia, 2006  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 20/01/2006   
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Contents >> Chapter 3 - International relations >> Australia's bilateral relationships


As a medium-sized power with diverse political, trade and investment goals, Australia continues to foster significant relationships with a range of countries on the basis of shared interests. Australia engages most substantially with countries that have the greatest influence on its strategic and economic situation.


The United States of America (USA) is among Australia’s most important economic partners, and is its closest security ally. Australia’s ties with the USA reflect the latter’s position as the world’s largest economy and leading military power. The relationship complements Australia’s commitment to the Asia-Pacific region, where US engagement contributes to security and prosperity.

Australia’s strategic alliance with the USA is formalised in the ANZUS Treaty, concluded in 1951. Australia-United States Ministerial Consultations involve the foreign and defence ministers of each country.

The two countries cooperate closely to promote their own security and to contribute to broader regional and global security. In 2004 and 2005, Australia worked closely with the USA in support of Iraq’s transition to self-government. The Australian Government cooperates extensively to counter terrorism, combat the spread of weapons of mass destruction and enhance military interoperability.

The Australia-US Free Trade Agreement entered into force on 1 January 2005, providing significant new opportunities for Australian business in the USA. In 2004, the USA was Australia’s second largest trading partner overall. Australia exported goods and services to the USA worth $9.5 billion (b) and $4b respectively, and imported goods and services from the USA worth $20.5b and $6b. Major Australian merchandise exports to the USA are meat, alcohol, crude petroleum and vehicles.

People-to-people ties, including educational and cultural links, are extensive.


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 interests in regional security underpin close cooperation on counter-terrorism and combating the proliferation of weapons of mass destruction.

Australia’s trade and investment relationship with Japan - the world’s second largest economy - is fundamentally important. Japan has long been Australia’s largest export destination, and in 2004 Australia exported goods and services worth $22b and $3b respectively to Japan. Leading merchandise exports are coal, beef, iron ore and aluminium. Australia imported goods and services from Japan worth $17b and $2b respectively.

The Australia-Japan Trade and Economic Framework, signed by the Prime Ministers of both countries in 2003, includes a joint undertaking to work towards comprehensive and balanced trade and investment liberalisation, and reflects a joint commitment to develop further the economic relationship. In 2005 the Prime Ministers agreed that the two countries should undertake a two-year joint feasibility study into a possible bilateral Free Trade Agreement.

Australia’s involvement at the 2005 World Exposition in Aichi promoted Australia as a leading business, tourism and education destination and highlighted the importance of the Australia-Japan relationship. The 30th anniversary of the signing of the Basic Treaty of Friendship and Cooperation between the two countries will be celebrated, in 2006, by an Australia-Japan Year of Exchange. The Australia-Japan Foundation, established in 1976 to foster relations between the people of Australia and Japan, supports a wide range of bilateral educational and cultural promotion activities.


Australia’s relationship with China seeks to maximise shared economic and strategic interests, while at the same time managing differences. China’s increasing importance to Australia reflects China’s growing involvement with the rest of the Asia-Pacific region and the global economy. Australia engages with China on a range of issues of mutual interest including regional security, cross-Strait relations, security on the Korean Peninsula and development assistance in the South Pacific. Australia and China have a regular bilateral human rights dialogue.

The Australian Prime Minister visited China in April 2005 (his fifth visit to China since 1996) and announced, with his Chinese counterpart, the decision to begin negotiations for a possible Australia-China Free Trade Agreement. The announcement followed the signing of the Australia-China Trade and Economic Framework in 2003, which provides a foundation for closer bilateral commercial relations.

Two-way trade has increased significantly over the past decade - in 2004 China was Australia’s third largest trading partner overall. Australia exported goods and services to China worth $11b and $1b respectively, and imported goods and services from China worth $18b and $1b. Major Australian merchandise exports to China are iron ore, wool, crude petroleum and coal.

The Australia-China Council, established by the Australian Government in 1978, plays a significant role in enhancing Australia’s cultural relations and people-to-people ties with China.

Within the parameters of its one-China policy, Australia promotes important economic and trade, cultural and people-to-people links with Taiwan.


Australia continues to advance its close ties with Indonesia, which include political relations, trade and investment, people-to-people links, education, tourism, development cooperation and cultural exchanges. There is extensive bilateral cooperation on counter-terrorism, people smuggling and other transnational crimes. The Australian Prime Minister visited Indonesia three times in 2004-05. The Indonesian President visited Australia in April 2005 and signed, with the Australian Prime Minister, a Joint declaration on a Comprehensive Partnership to advance bilateral cooperation.

Australia is committed to providing ongoing assistance towards Indonesia’s economic and social development. In January 2005, shortly after the December 2004 Indian Ocean tsunami, the Australian Prime Minister and Indonesian President announced a five-year $1b Australia-Indonesia Partnership for Reconstruction and Development - the single largest aid package in Australian history. Under the Partnership, Australia will provide extensive assistance for reconstruction and development in Aceh and throughout Indonesia.

The Australia-Indonesia Ministerial Forum, which involved eight Australian and five Indonesian ministers, was held in March 2005. The Forum, together with the Australia-Indonesia Trade Ministers’ Meeting, provides a key platform for enhanced cooperation between the two countries. In these and other forums Australia encourages further liberalisation of Indonesia’s business environment and import regime. The two countries have also agreed to develop a trade and investment framework. In 2004, Australia exported goods and services to Indonesia valued at $3b and $1b respectively, and imported goods and services from Indonesia valued at $4b and $0.5b. Australia’s major merchandise exports to Indonesia are cotton, crude petroleum, live animals and aluminium.

Australia promotes understanding and exchanges between the two countries through the Australia-Indonesia Institute, established by the Australian Government in 1989.


Australia attaches priority to its relationship with the Association of South-East Asian Nations (ASEAN), which is a key regional institution comprising Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. As a dialogue partner, the Australian Government participates in important ASEAN meetings, notably the ASEAN Regional Forum on promoting regional security and confidence building, and the ASEAN Post Ministerial Conference.

Relations between Australia and ASEAN were strengthened further in November 2004 when the Australian Prime Minister attended an ASEAN-Australia New Zealand Summit in Vientiane, Laos, to celebrate 30 years since Australia’s inclusion as an ASEAN dialogue partner. At the conclusion of the Summit, leaders announced the start of negotiations for a possible ASEAN-Australia New Zealand Free Trade Agreement. Agreement was also reached in 2004 on an ASEAN-Australia Joint Declaration for Cooperation to Combat International Terrorism, which will underpin regional cooperation on counter-terrorism and other regional security issues.

In July 2005, ASEAN foreign ministers announced that Australia will be a participant in the inaugural East Asia Summit, to be held in Kuala Lumpur, Malaysia, in December 2005. The invitation to participate in the Summit followed the Australian Government’s decision to accede to the ASEAN Treaty of Amity and Cooperation.

Australia also has substantial relationships with many of the individual members of ASEAN, spanning strategic, economic, development and educational ties. In recent years Australia has achieved significant progress towards greater integration with some of the dynamic economies of ASEAN.

The Singapore Australia Free Trade Agreement entered into force in 2003 and is subject to regular review to maximise the benefits for businesses in both countries. In 2004 Australia exported goods and services to Singapore valued at $3.5b and $2.5b respectively, and imported goods and services from Singapore valued at $6b and $2.5b. Australia’s largest export to Singapore is crude petroleum. The Australian Prime Minister visited Singapore in February 2005. This was followed by an official visit to Australia by Singapore’s President in March 2005 - the first visit to Australia by a Singaporean Head of State.

The Thailand-Australia Free Trade Agreement (TAFTA) and an Agreement on Bilateral Cooperation between Australia and Thailand were signed during an official visit to Australia by Thailand’s Prime Minister in July 2004. TAFTA entered into force on 1 January 2005. In 2004, Australia exported goods and services to Thailand valued at $3b and $0.5b respectively, and imported goods and services from Thailand valued at $3.8b and $0.9b. In addition to trade and investment, Australia pursues a broad agenda of cooperation with Thailand in law enforcement, counter-terrorism, defence, education and tourism. In 2005 Australia established an Australia-Thailand Institute to promote people-to-people, cultural and educational ties.

Since elections in Malaysia in March 2004, Australia and Malaysia have sought to build on long-standing bilateral cooperation with stronger political ties. In 2005, Malaysia’s Prime Minister paid an official visit to Australia - the first such visit by a Malaysian Prime Minister in 21 years. During the visit, the two countries launched negotiations towards a possible bilateral Free Trade Agreement and agreed to establish an Australia-Malaysia Institute to enhance institutional and people-to-people ties. In 2004, Australia exported goods and services to Malaysia valued at $2.4b and $1b respectively, and imported goods and services from Malaysia valued at $5.5b and $0.5b.

Australia takes appropriate opportunities to press for democratic reform and national reconciliation in Burma (Myanmar), including in the United Nations (UN) General Assembly.


Australia’s relationship with the Republic of (South) Korea (ROK) focuses on trade and investment, as well as cooperation in support of a nuclear-free Korean Peninsula.

For many years, Australia's commodity exports underpinned the ROK's rapid industrial growth. There continue to be significant opportunities for Australia to supply the ROK with goods and services, including energy and resources. In 2004, Australia exported goods and services to the ROK valued at $9b and $1b respectively and imported goods and services from the ROK valued at $5b and $0.3b. Major Australian merchandise exports to the ROK are coal, crude petroleum, iron ore, non-monetary gold and beef.

Australia established the Australia-Korea Foundation in 1992 to develop and deepen relations between Australia and the ROK.

Australia is active in support of efforts to resolve tensions on the Korean Peninsula. Australia resumed diplomatic relations with the Democratic Peoples Republic of Korea (DPRK) in 2000, but development of that relationship has been suspended pending progress by the DPRK on dismantling its nuclear weapons program. Australia has urged the DPRK to renounce nuclear weapons programs, and has worked closely with regional partners to ensure the DPRK understands the extent of international concern over the issue. In 2005 Australia co-sponsored a resolution carried by the UN Commission on Human Rights regarding the human rights situation in the DPRK.


Australia and New Zealand share a close relationship based on common values and proximity, and this is reflected in extensive contact at senior levels of government. Strategic and defence relations are set out in the 1944 Canberra Pact, the 1951 ANZUS Treaty and the 1991 Australia-New Zealand Closer Defence Relations Agreement. The Australia-New Zealand Leadership Forum, involving ministers, business representatives and senior government officials from both countries, met in 2004 and 2005 to explore ways to broaden and deepen trans-Tasman relations.

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. An annual CER ministerial meeting addresses ways of further facilitating the free flow of trade between the two countries. Exports of Australian goods and services to New Zealand were valued at $8.7b and $2.6b respectively in 2004. Australia imported goods and services from New Zealand valued at $5.2b and $1.7b over the same period. Australia’s major merchandise exports to New Zealand are office machines and equipment, vehicles and petroleum. Australia is New Zealand’s largest trading partner.

There are extensive people-to-people linkages between the two countries. The trans-Tasman Travel Arrangements of 1973 allow Australians and New Zealanders to visit, live and work in each others’ countries without restriction.


Australia worked closely with the East Timorese people and the UN in support of East Timor’s stable transition to independence in 2002. Australia continues to play a leading role assisting East Timor’s development, including through contributing to the UN peace-building mission and through a substantial program of bilateral assistance. Australia and East Timor are negotiating shared revenues from Timor Sea resources. The Australian Governor-General paid the first bilateral visit to East Timor by a foreign Head of State in 2004 and the East Timorese President made his first state visit to Australia in 2005.


Australia values its close historical, political, economic and community links with the island countries and territories of the Pacific, and has a strong interest in promoting their stability and economic viability. Australia is the largest provider of development assistance to the South Pacific and is playing an active role across the region in support of improved security and good governance.

Australia is a founding member and major donor to a number of key regional organisations in the South Pacific. These include the Pacific Islands Forum, which is the region’s principal political institution. The Pacific Islands Forum holds an annual Summit for leaders at which a wide range of security, economic, governance and other issues relevant to the region are discussed. For the first time, an Australian is serving as Secretary-General of the Pacific Islands Forum Secretariat.

Australia is coordinating the Regional Assistance Mission to Solomon Islands (RAMSI), which has succeeded in stabilising law and order and government finance, and is now assisting the Solomon Islands Government to focus on a second phase of longer-term nation building.

The Australian and Papua New Guinea (PNG) Governments established the Enhanced Cooperation Program (ECP) in 2004 to remove key impediments to PNG’s development. Under the ECP, Australia provided police and public servants to work in PNG Government agencies to promote legal reform, economic and financial management and border and transport security. The ECP received a set back following a PNG court ruling that elements of the PNG legislation underpinning the ECP were unconstitutional. However, in-principle agreement has been reached by Australia and PNG ministers on a revised ECP which is consistent with the court ruling. Australia has also deployed officials to Nauru to help promote economic reform and rebuild the Nauru police force.


The Australia-Canada relationship is mature, 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 on international security, trade and environmental issues, including in the United Nations. In 2004 Australia exported goods and services to Canada valued at $2b and $0.5b respectively. Australia imported goods and services from Canada of approximately the same value.


Australia continues to deepen its relations with the European Union (EU). Following its expansion in 2004 from 15 to 25 member states, the EU’s population grew to 455 million and its economy to a size comparable to that of the USA. 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 regularly holds broad-ranging policy dialogues at ministerial level with the EU Presidency, which rotates among members every six months.

Australia engages with the EU on strategic stability (especially concerning the Asia-Pacific region) and agricultural reform, among other issues. Australia is negotiating with the European Police Office (Europol) to enhance cooperation against transnational crime, including terrorism, drug trafficking and people smuggling.

Australia has close ties with many countries in Europe. The Australian Government promotes strategic and economic objectives through high-level dialogue, trade negotiations and promotion, and development of bilateral agreements. These objectives were advanced during a number of high-level visits between Australia and European countries in 2004-05. The Australian Governor-General and Prime Minister both visited the United Kingdom, reflecting the long-standing and vibrant relationship between the two countries based on shared values, security cooperation, strong trade and investment flows, and people-to-people linkages. The Governor General visited Russia in conjunction with an Australian promotion and to attend a ceremony to mark the 60th anniversary of World War II. The Australian Prime Minister visited Turkey to attend the 90th anniversary of the Gallipoli landings and to advance a range of initiatives to develop bilateral relations. The Prime Ministers of Sweden and Norway both visited Australia in 2004-05, reflecting interest in closer trade links and enhanced dialogue on global and regional strategic issues.

Australians of European descent contribute to strong people-to-people relationships with a range of European countries.


India is a significant power in world affairs. It has become an increasingly important economic, political and strategic partner for Australia. The Australian and Indian Governments participate in a regular Foreign Ministers’ Framework Dialogue, a Joint Ministerial Commission (on trade) and a senior officials’ Strategic Dialogue. At the Joint Ministerial Commission in 2005, the two countries agreed to begin negotiations for a Trade and Economic Framework to lift the profile of and set the direction for the bilateral trade and investment relationship.

In 2004 Australian merchandise exports to India grew by more than 60% compared with the previous year. Australian exports of goods and services to India were valued at $5.5b and $0.5b respectively. Australian imports of goods and services from India were valued at $1b and $0.3b. Australia’s major exports to India are non-monetary gold, coal, copper and wool. 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. Australia contributed to international diplomatic efforts which paved the way for an easing of tensions between India and Pakistan over recent years. The visit to Australia by the Pakistani President in 2005 represented an important milestone in Australia’s relations with that country. Agreements on cooperation on counter-terrorism and agriculture were signed during the visit.

Following participation in the international military intervention in Afghanistan to oust the Taliban regime and disrupt the Al Qaida terrorist network, Australia continues to contribute to Afghanistan’s stability and reconstruction. Australia also contributes to peace-building in Sri Lanka.


Australia engages with Latin American countries on a range of issues, including trade liberalisation, environmental protection and fisheries management. With New Zealand, Australia participates in a formal dialogue with the members of Mercosur - South America’s most significant regional trade agreement (Brazil, Uruguay, Paraguay and Argentina) - to discuss trade policy cooperation. The Council on Australia Latin America Relations, established by the Australian Government in 2001, supports Australia’s broad diplomatic and economic objectives in the Latin American region.


The Middle East is an area of global strategic and commercial importance. The Australian Government has long supported and encouraged the establishment of a viable Palestinian state standing side-by-side with a secure Israeli state.

Australia participated in the international coalition to liberate the people of Iraq, and continues to attach priority to supporting Iraq’s political transition, internal security and rehabilitation. Australia’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 and the United Arab Emirates are undertaking negotiations towards a possible free trade agreement, and Australia is negotiating memorandums of understanding with a number of countries in the region in support of Australia’s significant live animal export trade. A Council for Australian-Arab Relations was established by the Australian Government in 2002 to strengthen ties between Australia and Arab countries.


Australia’s most significant relationship in Africa is with South Africa where there is a substantial bilateral trade relationship and strong people-to-people links exist. Australian mining companies are increasingly active throughout Africa and this is becoming an important focus of bilateral engagement. Australia applies ‘smart sanctions’ to exert pressure on the Zimbabwean Government to improve its governance and economic management and to restore respect for human rights, while continuing to provide emergency food and other humanitarian aid. Australia is working with the international community to address political instability and the humanitarian situation in Darfur, Sudan.

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