1301.0 - Year Book Australia, 2002  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 25/01/2002   
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Contents >> International Relations >> Australia’s bilateral relationships

As a nation with global interests, Australia deals with countries in many regions. The countries which most substantially engage Australia’s interests are those which are influential in shaping Australia’s strategic environment, as well as being significant trading and investment partners. Foremost among these are the three major powers and largest economies of the Asia-Pacific region - the United States, Japan and China - and Australia’s near neighbour, Indonesia. Significant Australian interests are also engaged in Australia’s relationships with the other states of the Association of South East Asian Nations (ASEAN), the European Union and its member states, the Republic of Korea, and, in the South Pacific, New Zealand and Papua New Guinea.

United States

Australia shares a relationship with the United States based on a strong commitment to democracy, security and an open trading system. The relationship complements and reinforces Australia’s practical commitment to the Asia Pacific, as well as strengthening the engagement of the United States in the region, an engagement which has assumed great importance as the countries of the Asia Pacific, particularly those in East Asia, continue to undergo change.

These shared strategic interests and values are underpinned by the dynamic trade and investment links between Australia and the United States. The United States is Australia’s second largest trading partner and largest source of investment, as well as a key regional and global partner in achieving more open markets through the WTO and APEC. People-to-people ties, including educational and cultural links, are extensive and wide-ranging, with over 600,000 business visitors and tourists travelling between Australia and the United States each year.


Japan occupies a vital strategic position in North-East Asia and continues to play a primary economic and political role in our immediate region. Australia works hard to encourage close dialogue with Japan on a wide range of economic, political and strategic issues and the development, to the extent possible, of policies which are mutually reinforcing. Japan continues to be Australia’s major trading partner, accounting for some 16% by value of our total trade (exports plus imports) in 2000. It is a significant investor in Australia and our largest source of in-bound tourism.

Australia’s partnership with Japan reflects the broad alignment of Australian and Japanese strategic, political and economic interests in the Asia-Pacific region. Like Australia, Japan supports the long-term strategic engagement of the United States in the Asia-Pacific region and recognises the fundamental contribution that it makes to regional stability. Japan also shares our interest in advancing the APEC forum as the primary vehicle for economic cooperation in the Asia Pacific region. The Australia-Japan Conference for the 21st Century was held in Sydney on 29 and 30 April 2001 to chart new directions - strategic, economic, cultural, educational and scientific - for the relationship. The Conference Declaration, ‘The Sydney Declaration for Australia-Japan Creative Partnership’, set out a comprehensive action agenda: to strengthen economic relations, including through a trade and investment facilitation agreement; to expand dialogue and cooperation on security; and to increase people-to-people links. The Prime Minister’s visit to Japan in August 2001 built further on these links.


China’s importance to Australia grows 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 are critically important to the maintenance of regional peace and security. In particular, China’s relations with Japan and the United States play a vital role in shaping the security context for the entire region. It is in Australia’s national interest actively to encourage and support Chinese participation in dialogue and cooperation on regional security issues. During 2000-01 the exchange of high-level visits started by the visit of Chinese President Jiang Zemin to Australia in late 1999 continued, with six Australian ministers and the Deputy Prime Minister visiting China.

The trade and investment relationship between Australia and China is expanding. China is Australia’s third largest merchandise trade partner. China’s entry into the WTO will open up new opportunities for Australia, both in terms of greater market access for Australian goods and services and by encouraging China to integrate further into the global economy and abide by international trade rules.

Mutual economic and trade interests are increasingly underpinned by the strengthening of broader bilateral ties including cultural, educational, scientific and people-to-people links. With different cultures and traditions, Australia and China do not always share the same view, but regular dialogue and government-to-government exchanges have been established on a range of issues - from human rights to security issues - in a bid to discuss differences of opinion. The one-China policy will continue to be a fundamental element of the bilateral relationship within which Australia pursues important economic and trade interests with Taiwan.


Indonesia is one of Australia’s nearest neighbours and as such has long been recognised as one of our most important relationships. Australia maintains a large-scale bilateral program of economic, technical and humanitarian assistance to Indonesia.

Australia’s relationship with Indonesia is now back on track after strains caused by developments in East Timor. Australia maintains good links with key players in Indonesia and the relationship remains strong in many areas, despite short-term political pressures. The visit to Australia by the Indonesian President, Abdurrahman Wahid, in 2001 was an important indication of the overall health of the bilateral relationship, which was further strengthened by Prime Minister Howard’s early visit to meet Wahid’s successor, President Megawati Soekarnoputri, in August 2001.

East Timor

Australia has worked closely with the United Nations and the East Timorese people to assist the future development of East Timor. Australia led the multinational force, INTERFET, which was mandated by the United Nations to stabilise the situation following the vote for independence on 30 August 1999. We have continued to contribute to the UN Peacekeeping Force which took over from INTERFET, and have worked closely with the UN Transitional Administration in East Timor (UNTAET) in the lead-up to granting of full independence. Constituent Assembly elections were held in August 2001, but the UNTAET mandate was extended until 31 January 2002 to allow the East Timorese Government to establish itself.

Australia moved swiftly to respond to East Timor’s development needs and is one of the country’s major aid donors. In July 2001 Australia, East Timor and the United Nations agreed to the Timor Sea Arrangement, which is estimated to give East Timor more than $7b in revenue from existing and planned oil and gas developments in the area.

The Republic of Korea

The Republic of Korea (ROK) is one of Australia’s most important regional partners and we have worked closely with the ROK to promote common interests in the Asia-Pacific region. Korea was Australia’s fourth largest trading partner in 2000. Australia has a vital interest in rapprochement on the Korean Peninsula and welcomed the historic June 2000 summit meeting between the two Korean leaders. Working closely with key regional partners, we seek to promote stability in North Asia through increased bilateral dialogue with North Korea. Australia’s resumption of diplomatic relations with North Korea, announced in May 2000, will enable us to promote broader regional stability.

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 Viet Nam). Australia’s relations with ASEAN cover trade and investment, as well as cooperation in the technical, cultural, defence and educational fields. Australia is also actively involved in the ASEAN Regional Forum, which promotes regional security dialogue and confidence building, as well as the ASEAN Post-Ministerial Conference.

The South Pacific

The South Pacific region, in which Australia has been closely involved for a long time, has been undergoing a period of uncertainty and change, with political crises in Fiji and Solomon Islands. These problems have been produced by a combination of traditional communal frictions, colonial-era decisions and mistakes, and the global pressures which bear especially heavily on small, isolated states. They are problems which will not be solved easily or quickly. Australia currently provides over $500m annually to the independent countries of the region in development assistance - more than any other donor - and, along with New Zealand, maintains an extensive diplomatic network in island capitals.

A shared background and experience, and a multi-faceted relationship, incline Australia naturally towards a unique partnership with New Zealand, which is Australia’s fourth largest export market.

Australia has a long-standing, close relationship with Papua New Guinea (PNG), whose location makes it of strategic importance to Australia. Pursuing a constructive and productive bilateral relationship is a high priority for Australia and we will continue to support a process of sustainable economic development in PNG, aimed at enhancing its self-reliance. Australia has played a strong role in supporting the peace process in Bougainville, particularly through the Peace Monitoring Group. We have also contributed significantly to the restoration of peace in Solomon Islands, through facilitating ceasefire and peace talks and by leading an International Peace Monitoring Team to Solomon Islands.

Australia’s engagement in the South Pacific will remain both broad and deep, and Australia will continue to support local efforts both to advance development and, where necessary, restore stability, in cooperation with those other countries and institutions which have their own long-term relationships with the region.


India has growing strategic and economic importance in global and regional affairs and is an important dialogue partner for Australia in a range of international forums. The Indian Foreign Minister visited Australia in June 2001 and Australia’s future focus will be on expanding further the bilateral trade and economic relationship and security dialogue.


Australia has close ties with many of the countries of Europe. We share important social, cultural, historical and political experiences. The European Union is a leading participant in key forums such as the Group of Eight (G8), and the states of Europe make valuable contributions to leading multilateral organisations such as the UN, the WTO and the OECD. As one of the key economic centres of the world, Europe is important to Australia’s trading interests. The EU as a single market is Australia’s largest merchandise trading partner and the largest foreign investor in Australia. The United Kingdom is the second largest single country investor in Australia and is Australia’s second largest destination for outward investment, reflecting historical and cultural links between the United Kingdom and Australia. We also continue to cooperate closely in the Commonwealth.

The key central and south-eastern European markets for Australia are Poland, Hungary, the Czech Republic and Romania, while the smaller transition economies - Slovenia, the Slovak Republic and Bulgaria - also offer some trade opportunities for Australia. Membership of European institutions - the EU and the North Atlantic Treaty Organisation (NATO) - by these central and eastern European countries would lead to them becoming more important bilateral partners for Australia.

Canada and Latin America

The close historical and cultural ties Australia has with Canada will continue to be the basis for an active trade and investment relationship, and close cooperation on international issues.

In Latin America, our efforts are focused on expanding Australia’s trade and investment relations. The size and diversity of the markets in the region offer significant opportunities for Australian exporters and investors. As well as supporting the efforts of individual Australian businesses in Latin America, the Australian Government pursues a productive relationship with Latin American countries on a range of international political issues.

The Middle East and Africa

Australia has growing commercial interests in the Middle East, a significant destination for Australian agriculture, services and manufactures exports. Australia’s most significant relationship in Africa is with South Africa, which is a growing market for Australia’s commercial interests and provides a base for trade with all the countries of the Southern African Development Community.

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