Australia and China announced July 13 that they had forged a bilateral trade agreement, moving China one step closer to achieving its goal of WTO accession this year. Following the announcement and prior to leaving Beijing for Shanghai, Australian Foreign Minister Alexander Downer told reporters that he was pleased with the progress China had made in opening its markets. Downer then addressed the issue of the U.S. tariffs on Australian lamb, calling it a hypocritical move. Downer compared the U.S. trade restriction to China's trade openings, saying, "I think the contrast is obvious for all to see." Australia's increased cooperation with China stems from several underlying factors coming together at this time, and may point to the future of Australia's foreign policy initiatives in Asia.
On July 13, Australia became the second major country in a week to forge a bilateral trade agreement with China, moving China one step closer to World Trade Organization (WTO) accession. Australian Foreign Minister Alexander Downer and Chinese Foreign Trade Minister Shi Guangsheng released a joint statement announcing the agreement and saying that both nations would work together to facilitate an early entry of China into the WTO. The agreement was originally formulated in May when Australian Deputy Prime Minister and Trade Minister Tim Fischer visited China, but was not finalized until now.
Australia's trade agreement with China was praised by Downer, who lauded China's market openings. At the same time, Downer, prior to boarding a plane from Beijing to Shanghai, criticized the United States for the recently enacted tariffs on Australian and New Zealand lamb. Downer said, "We regard this as hypocritical because the Americans argue for trade liberalization but they impose trade restrictions." Comparing Chinese and U.S. actions, Downer pointed out, "I think the contrast is obvious for all to see."
Downer's comments came as Australian Prime Minister John Howard was making similar statements about the U.S. lamb decision during a visit to Washington. On July 12, Howard told reporters, "We're very unhappy, very, very unhappy." Howard added, however, that the lamb tariff decision, while not acceptable to Australia, would not come in the way of other cooperation with the U.S., primarily in the area of security. Australia's disappointment with the U.S. and its closer cooperation with China are, in part, linked. In fact, Australia has been thrust into making long-term decisions on its Asian foreign policy in a very short time.
There are three main factors that have led Australia to speed up its foreign policy initiatives in East Asia. Australia has been increasingly concerned about its own regional security, in light of decreased U.S. attention to Asian issues such as Indonesia's political situation and Chinese foreign policy initiatives (See STRATFOR's GIU). In response, Australia has increased contacts and cooperation with China. In the midst of these Sino-Australian talks, Australia was thrust into the middle of the China-Taiwan issue by Papua New Guinea's decision to establish diplomatic ties with Taiwan. Australia decided to back China, while simultaneously trying to stay out of internal Papua New Guinean politics. Australia was pulled deeper into the issue as Taiwan's announcement of a redefinition of cross-straits relations was announced while Downer was in Beijing for talks. A third issue accelerating Australia's involvement in East Asian politics was a straining of ties with the U.S. over the next director general of the World Trade Organization and the disagreement over increased tariffs on Australian lamb (See STRATFOR's Special Report).
The combination of these three issues has driven Australia to decide it is more important to deal directly with Asia than to try and rely on the West, specifically the U.S., to maintain Asian security. Australia, while it had been moving slowly in that direction, has now suddenly become an unexpected member of the Asian bloc. Australia has now begun to take steps to address Asian stability and problems from an internal Asian standpoint, rather than from the perspective and style of Western nations. Australia's dealings with its Asian neighbors will likely develop into a closer style of cooperation, even more pronounced than the steps the European Union is taking in establishing constructive dialogues with Asian countries on human rights and other contentions issues. Australia already has taken China's side on the issue before (See STRATFOR's GIU), and Downer said Australia was "very positive" about its dialogue on human rights with China.
While Australia has made it clear that it is not planning on breaking ties with the U.S. over its disagreements on trade issues, it is also clearly not waiting for someone else to address Asian issues that may affect Australian security. The series of recent events, all bearing down on Australia at this time, have accelerated the need to clearly delineate Australia's place in the world - whether it is a Western country in Asia or an Asian country with ties to the West. Australia appears to have answered this question, and the current round of contacts with China may be indicative of a future Australian foreign policy highlighted by strong ties and cooperation with Asia, in particular with China.