Sections

Services

Information

UK United Kingdom

Abbott’s pursuit of Japan risks a free trade agreement with China

Prime minister Tony Abbott will be hoping the Japanese leg of his ambitious trade trip to northeast Asia can replicate the success of securing a free trade agreement (FTA) with South Korea. The close relations…

Tony Abbott has declared Japan, under prime minister Shinzo Abe, as Australia’s ‘best friend in Asia’. But this might come at a cost as Abbott seeks to close a FTA with China. EPA/Mast Irham

Prime minister Tony Abbott will be hoping the Japanese leg of his ambitious trade trip to northeast Asia can replicate the success of securing a free trade agreement (FTA) with South Korea.

The close relations between Japan and Australia have become even warmer since both Japanese prime minister Shinzo Abe and Abbott have been in office. Abbott declared at the East Asia Summit leaders’ meeting last year that Japan was Australia’s “best friend in Asia”. The Australian government sees securing the Japan-Australia FTA as vital to strengthening that relationship further.

However, a tight strategic friendship with Japan (and the US) may come at the cost of a FTA with Australia’s largest trading partner, China.

The politics of trade

Japan has long been Australia’s second-largest trading partner, and third-largest source of foreign investment, as postwar economic ties steadily grew following the 1957 Agreement on Commerce.

A FTA is expected to deliver greater access for Australian agricultural exports, particularly beef and dairy, to Japanese markets. Lower tariffs on Japanese manufactures, particularly cars, would no longer displace Australian industry, given that its car manufacturing is ending.

One of the CEOs accompanying the large Australian trade delegation to Asia is James Packer. He is eager to set up casinos in Japan, pending their expected legalisation in time for the Tokyo Olympics in 2020.

However, the Japan-Australia FTA is not yet a sure thing. Trade minister Andrew Robb has warned the final round of negotiations will be tough.

Japan’s agriculture lobby, a core constituency of the ruling Liberal Democratic Party (LDP), remains firmly opposed to allowing easier access to food imports. The Cattle Council of Australia retains doubts that an FTA can be successfully concluded.

The determination of Abe to press ahead with his economic stimulus plan, popularly called “Abenomics”, favours achieving the FTA. As part of the “third arrow” of Abenomics, which supporters claim is successfully revitalising Japan, various sectors of the economy are to be opened up to more international competition. Abe is therefore prepared to override the farmers’ lobby and internal critics within the LDP, given his current dominance of Japanese politics.

A Japan-Australia FTA suits the wider neoliberal economic agendas of both Abbott and Abe, creating greater momentum towards completing the Trans-Pacific Partnership regional trade agreement. Both leaders are committed to this too.

Lower tariffs on Japanese-made cars would no longer displace Australian industry given that car manufacturing in Australia is ending. AAP/Joe Castro

Security ties

Often overlooked are the closer security ties between Australia and Japan. The Australian Defence Forces (ADF) and Japanese Self-Defence Forces (JSDF) have co-operated in UN peacekeeping operations since the 1990s in Cambodia and East Timor, and also in Iraq and in UN-authorised anti-piracy operations in the Indian Ocean.

A formal Joint Declaration on Security Cooperation was signed between Australian and Japan in 2007, and upgraded in 2010.

This recent history of defence co-operation now has heightened resonance. Abe and the LDP are controversially set on reinterpreting the pacifist Article 9 of Japan’s constitution, which restricts the use of force. Abe’s cabinet has already increased defence spending and eased restrictions on arms exports. An expert review panel is expected to recommend that Japan can exercise its right to participate in collective self-defence with its allies.

While this constitutional change is generally assumed to be referring to the US – Japan’s key ally – it could also involve Australia. Since 2002, Australia, Japan and the US have occasionally held the Trilateral Security Dialogue meetings between their defence and foreign ministers. The ADF and the JSDF could therefore conceivably conduct combined combat operations with the US in future.

The closer security ties between Australia and Japan are vital but often overlooked. AAP/Jason Reed

Abbott welcomes Japan taking a more active role in international security, praising it for sharing similar democratic values with Australia. In his 2009 book Battlelines, Abbott regarded Japan as part of the “Anglosphere”.

Reflecting this mutual admiration, Abe is due to make a return visit to Australia in July. He will be granted the rare honour of an address to a joint sitting of parliament, the first Japanese prime minister to do so.

What might Abbott’s trip achieve?

Fortuitously, following the recent ruling by the International Court of Justice, Japan has announced the cancellation of its Antarctic whaling program. However, Japan is likely to pursue its whale hunt in the northern Pacific on a smaller scale, so whaling will continue to be an irritant in the relationship.

Deepening military ties between Japan and Australia will not be publicised on Abbott’s visit since these generate concern and distrust in China. Abbott faces a far greater challenge in securing a FTA with China. Beijing is already angered by Australia effectively siding with Japan in the dispute over the Senkaku Islands.

Abbott and foreign minister Julie Bishop continue to repeat their optimism that all nations in the region realise it is in their best interests to maintain peaceful relations, with Australian diplomacy providing a positive example. There is a real danger, though, that a closer security relationship with Japan will entangle Australia more deeply in the worsening geopolitical tensions of the region.

Join the conversation

30 Comments sorted by

  1. Garry Baker

    researcher

    A FTA with China would be devastating for Australia .. They want to be able to walk in here and buy up our assets to the tune of a $billion dollars in a single purchase without having to seek permission to make that purchase... (ie: a single transaction of $1 billion - with no limit to the number of transactions)

    Sure, theoretically we might be able to sell China some more fruit and vegetables, and maybe some wine ... but that's about it.

    report
    1. Bruce Shaw

      Retired Hurt

      In reply to Garry Baker

      Garry, I too share your concerns and at the risk of being howled down as a xenophobe I fear for the future.

      Chinese money has been infiltrating the island nations of the Pacific via supposed soft loans and aid for some time now. I suspect this is a strategic push so that the presence and access of Chinese military to the Pacific becomes easier.

      This allows all sorts of benefits and I used to say with sarcasm that it will only be a matter of time before a Chinese war ship is parked at the wharf…

      Read more
    2. grant moule

      Consultant

      In reply to Garry Baker

      I agree. Isn't it better to be selling more produce to China, instead of selling assets (real-estate, farms, mines)? If it's a true FTA, how much real-estate can Australians purchase in China?

      report
    3. Bruce Shaw

      Retired Hurt

      In reply to grant moule

      Property in China is not for sale unless you have a Chinese passport ie citizenship.

      The only stuff we have that China wants is in the ground. Therefore they either buy it from us (expensive) or buy/invest in land and an FTA with the ability to take as they want (cheaper).

      There is no way that Australia can win when it comes to an FTA with China but that will not stop our government from selling its arse if it means reelection and short term gain.

      report
    4. Chris Saunders

      retired

      In reply to Bruce Shaw

      Is there any way Australia can win when it comes to an FTA with the US, Japan or South Korea?

      report
    5. Bruce Shaw

      Retired Hurt

      In reply to Chris Saunders

      Possibly not win per se but certainly there is at least a measure of safety in trading with those nations that cannot be said for trading with China.

      The recent importation of vehicles containing asbestos (Great Wall) is a good example.

      report
    6. Chris Saunders

      retired

      In reply to Bruce Shaw

      Somewhat like the safety issues of the imported German 'Golf' and some Toyota vehicles?
      There are problems with the US FTA and there are problems with these others as well. Only today the MSM have reported the Chamber of Commerce and Industry have complained to Andrew Robb that unless technical elements of the Korean deal are redrafted it will become unworkable in a commercial sense. Of course it is perhaps important to note that the Chamber does not represent big business, but small and medium exporters.

      report
    7. Bruce Shaw

      Retired Hurt

      In reply to Chris Saunders

      Yes Chris there were problems with those vehicles but I fail to see what this has to do with an FTA with China.

      What exactly do you see as beneficial to Australia?

      What do you think China wants from Australia and visa versa?

      Do you see it ethically ok to use goods that have been created by slave labour?

      And to say my comments are terrifying is rather dramatic don't you think?

      report
    8. Chris Saunders

      retired

      In reply to Bruce Shaw

      I thought we were taking about problems with FTAs and imported vehicles.
      I see the opportunities for the expansion of trade as beneficial for Australia; not just digging rocks but food production and niche manufacturing. It does occur and could be increased.
      I am not sure in what regard you are talking about slave labour; if you are talking about wage slaves I think few of us are immune to this disease.
      Yes, possibly in saying your comments were terrifying I was being dramatic, but your comments were describing China as if they were the modern world's policeman aka the US and I am not convinced that China intends, or needs to follow that particular path.

      report
  2. Danah Xue

    employed

    China may not like the close tie between Australia and Japan. On the surface they may be posturing and protesting loudly. But the chinese are mature and smart enough to distinguish their political need and economic need. In other words, the Chinese needs more Australian resources and investment markets than the other way around.

    The Chinese has long recognized that Australia's traditional stand and fundamental values are more in line with America and Japan which are unlikely changed. Despite of this, the Chinese has always regarded Australia a non-aggressive, non-threatening country.

    The effort and scale Abbott government has put in finding MH 370 has been greatly appreciated by the Chinese.

    PM Abbott should not need to change much to please the chinese, even-handedly he would be just doing fine.

    report
    1. Bruce Shaw

      Retired Hurt

      In reply to Danah Xue

      So what you are saying is that if the Chinese regard a country as non threatening, non aggressive neighbor then they will passively become a partner in trade?

      I guess Tibet has nothing to trade.

      Oh and pardon my cynicism but the Malaysian plane crisis has been a great excuse for Chinese war ships and planes to get a first hand look at at Australian bases and territorial waters.

      Could you imagine the situation to be reversed if a plane carrying US citizens went down in the South China Sea?

      report
    2. Danah Xue

      employed

      In reply to Bruce Shaw

      Being originally from China, I think that I understand a bit more about the Chinese's mind set, nothing more and nothing less.

      If there are benefits of free trade, the Chinese are smart enough to separate their political need ( in this case, Australia saying Japan is good friend etc) and to grab the economic opportunities.

      That is why that China has been quite successful in running a capitalism economy system under a non-democratic socialism political system.

      I don't quite understand rest of your points.

      report
    3. Bruce Shaw

      Retired Hurt

      In reply to Danah Xue

      I love your semantically enhanced description of a Communist Regime.

      The rest of my points relate directly to trusting a system that does not govern with a rule of law.

      I have no doubt at some time in the future China will need to make a decision about who its real allies are and all the free trade in the world will not buy Australia at the seat of that table.

      report
    4. Garry Baker

      researcher

      In reply to Bruce Shaw

      Could you imagine the situation to be reversed if a plane carrying US citizens went down in the South China Sea? """

      Yes indeed Bruce, there would be hell to pay if a vessel or aircraft had to probe for a missing airliner in the Sth China Sea - even if that piece of ocean was regarded by the world as international waters.

      Carol Daly suggests, "we should expect and welcome investment from our major trading partner."

      Trading partner ?? ... We sell them rocks, nothing much else - and…

      Read more
    5. Bruce Shaw

      Retired Hurt

      In reply to Garry Baker

      Your last sentence nailed it and there are a very few select Australians who will make a few more billion from the transfer.

      I have seen first hand the nature of Chinese business ideology on a micro scale in a pacific island nation. It is done very discreetly with little fanfare and there is only one real winner.

      It is a symbiotic relationship that appears to be the agenda but it ends up being an extremely virulent parasitic outcome.

      report
    6. Garry Baker

      researcher

      In reply to Bruce Shaw

      Bruce... to be truthful, one cannot blame the Chinese for playing a decent game of hardball... However, what really irks me is the vacant stance we get from our political leaders who allow this to happen

      Indeed, they have no idea of how much of Australia, we don't own these days. Never bothered to keep score. Nor have they bothered with a thorough investigation of our so-called reciprocal benefits... Of which, they are few in number, or meaningful worth

      The US FTA for instance.. A deal John…

      Read more
  3. Carol Daly

    Director

    I am very saddened and a bit shocked by Garry and Bruce's contributions to this discussion. I thought most Australians had long since let those sentiments go.
    America, Japan, Korea and Europe are still way ahead of China (less than 5%) in investing in Australia, particularly in land and real estate. As a rising power in our region we should expect and welcome investment from our major trading partner. Trade is a two way process.
    If you haven't visited China in the last five years, I suggest you do so for your next holiday. Your historically based views may be challenged by modern China on view in Beijing, Shanghai and Hong Kong.

    report
    1. Bruce Shaw

      Retired Hurt

      In reply to Carol Daly

      I have no desire to gasp for breath in Beijing. I have been to Hong Kong and did not appreciate the constant smell thanks to the sewer system located under the island.

      As for sentiment all I can say is that China has an abhorrent record of human rights (albeit it appears our government is trying to catch up) to its own people and its neighbors.

      I also point out the labor camps, lack of OH&S and powdered milk (melamine) etc as episodes that point to poor governance.

      As far as the recent…

      Read more
    2. Chris Saunders

      retired

      In reply to Carol Daly

      I totally agree Carol that Garry and Bruce's contributions are terrifying. Even in the past such attitudes were seen as the ill considered ravings of a wrong thinking minority.
      They, like our PM, seem to have forgotten that it was Japan who was militarily ambitious in the Second World War (and earlier) and it was they who committed atrocities against both the Chinese and Australians military and civiilians.
      I also agree with Danah's comment completely. The
      Chinese are a very adult people and…

      Read more
    3. Bruce Shaw

      Retired Hurt

      In reply to Chris Saunders

      Oh please report facts not fiction.

      The labels you speak of were caused by a printing error and there was nothing untoward with the product.

      My thought processes have nothing to do with past atrocities but are based around what possible benefit Australia can achieve from China when all they want is land and resources.

      Anything that we can trade with them apart from this can be sourced elsewhere cheaper or made by themselves.

      Therefore I question the benefit to Australia as a whole rather than the bank balance of a selected few.

      And BTW Tibetans do not suffer from "popular idealistic western misunderstanding", they are brutalised by a communist regime.

      report
    4. Chris Saunders

      retired

      In reply to Bruce Shaw

      I'll take your last point first. China freed Tibetans from medieval serfdom, and medieval religious serfdom at that. You might prefer people to live in such conditions, but personally I don't. There was no freedom there.
      You make the assumption that all China wants is land and resources and yet we find coffee shops even a Jamaican Blue franchise, KFC, McDonald's and so on. Any hotel you might choose to stay at you will find Denmark and New Zealand butter is everywhere, but n'ere a trace of Australian. Australian wine is for sale even in the local corner store equivalent but at such a price Australians would refuse to pay, however Chilean wine was quite reasonable. There are wonderful opportunities for Australian commercial enterprises in China, we just don't have the nous or possibly the lack of prejudice.
      I'm glad you have found a happy solution to the incorrect due date labeling. Do you think an Australian parent would accept that explanation?

      report
    5. Chris Saunders

      retired

      In reply to Chris Saunders

      Oh and on the matter of beer, the most popular drink of all in China. You can freely find Chinese, Japanese, Italian, German and so on, but not one sighting of an Australian beer. Are our masters of industry really trying?

      report
  4. Rohan Kirkpatrick

    logged in via Facebook

    "Prime minister Tony Abbott will be hoping the Japanese leg of his ambitious trade trip to northeast Asia can replicate the success of securing a free trade agreement (FTA) with South Korea."

    That's "Prime Minister Tony Abbott", in "North-East Asia"

    "Japan has long been Australia’s second-largest trading partner, and third-largest source of foreign investment, as postwar economic ties steadily grew following the 1957 Agreement on Commerce."

    Did this even need to be stated? Who in your audience…

    Read more
  5. R. Ambrose Raven

    none

    Abbott’s arrogant contempt for the legitimate interests of other nations – and disdain for the damage they could do to us - is demonstrated by his indifference to relations with Indonesia.

    “Abbott’s pursuit of Japan risks a free trade agreement with China”

    Excellent!

    “Abbott declared at the East Asia Summit leaders’ meeting last year that Japan was Australia’s “best friend in Asia”.”

    Delusional!

    “There is a real danger, though, that a closer security relationship with Japan will entangle…

    Read more
  6. Graham Bell

    Scrap-heaped War Veteran

    Alright, is it my turn to make "ill considered ravings of a wrong thinking minority" yet?.
    It is too late now to do anything but adapt to your new status as natives in a colony. You now live in a colony that was and is still being "carved up like a melon" - a situation every Chinese understands very well ever since in Celestial Empire (Manchu China or Qing China) was divided up by an assortment of British, French, German, Japanese, Russian and, yes, American, pirates, robbers, crooks, religious ratbags, mercenaries, investors, drug-dealers, dodgy merchants and loony idealists. What is so special about Australia that makes us immune to similar treatment for displaying similar weakness for the whole world to see.?
    The Abbott tribute mission to our new owners is pathetic - but just ignore it and get on with making a living for yourself as best you can in rapidly changing circumstances.

    report
    1. Garry Baker

      researcher

      In reply to Graham Bell

      You have nailed it Graham ....it's been happening for quite some time now, but we fail to see it.

      Australia - "carved up like a melon" - Says it all

      report
  7. R. Ambrose Raven

    none

    Note how mainstream media comment completely and totally ignores our recent historical experience with “free” trade “agreements”. Note too how ABC commentators gushed about the joys, the wonders, the supposed benefits of this FTA despite it so obviously being the ideological brain-child of the duplicity of ideologues at The Australian who attack the ABC so frequently.

    ABC journalists may not speak above a murmur when saying something they think Murdoch may dislike, but they happily provide…

    Read more
    1. Chris Saunders

      retired

      In reply to R. Ambrose Raven

      Although I would not like a media which just sprouts the government's line as it is increasingly suggested in certain circles that one should not say anything against Australia, I certainly have been irritated by the blend of opinion and reportage that has overtaken all our MSM. And the dominance of the person you mention is most unseemly and we have never voted for him although he would probably argue we did with our dollar. I just want the facts of the news and then I will make up my own mind thank you and draw my own conclusions, but it is very difficult to even get the facts and there are at present none coming from the government.
      If the only way to keep a particular government or ideology in power is to dumb down and propagandise the populace in the apparent dread of the eventuality of that other fairy tale: the possible revolution of the proletariat, then one would have to question the wisdom of such policies and their ethical stance.

      report
    2. Chris Saunders

      retired

      In reply to Chris Saunders

      The facts of the Korean FTA as I received it yesterday:
      Channel 10, 5 0’clock news: Australia will lose $5.4 billion in revenue due to the lowered car tariffs as a result of the Korean FTA. Well, I could have got that figure wrong. Some of you would know what it’s like to try to capture that brief flash of English sub-titleling at the bottom of the screen. It’s mostly right, frequently typed wrongly, sometimes the film’s been edited and the odd bit of sub title still flows and other times it…

      Read more
    3. Graham Bell

      Scrap-heaped War Veteran

      In reply to R. Ambrose Raven

      I'm glad someone has mentioned 'how mainstream media comment completely and totally ignores our recent historical experience with “free” trade “agreements”.'

      This was just like the attitudes of greedy merchants and corrupt mandarins in the Chinese Empire, during the 19th Century , towards one after another of the Unequal Treaties imposed by foreign powers and by thieving foreign merchants. The faces and the words are different in today's world, of course, but the attitudes and the outcomes of those attitudes is pretty much the same.

      The sad thing is that had Australia taken a robust, long-term and self-interested approach to international trade three decades ago - instead of being obsequious, weak, silly, gullible and greedy - Australia would now be the richest country in the world and our East Asian trading partners would be richer too.

      report