tag:theconversation.com,2011:/uk/topics/abbott-in-asia-9745/articlesAbbott in Asia – The Conversation2014-04-12T10:58:44Ztag:theconversation.com,2011:article/253772014-04-12T10:58:44Z2014-04-12T10:58:44ZAbbott’s Asia trip comes off – for now<figure><img src="https://images.theconversation.com/files/46252/original/thy39cgd-1397264518.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Signing a Economic Partnership Agreement with Japan was the highlight of Tony Abbott's whirlwind northeast Asia trip, which also took in China and South Korea.</span> <span class="attribution"><span class="source">EPA/Kimmasa Mayama</span></span></figcaption></figure><p>Prime minister Tony Abbott’s diplomatic and trade mission to <a href="https://theconversation.com/topics/abbott-in-asia">northeast Asia</a> can be hailed as a success. Overall, it met its main objectives. </p>
<p>The trip has strengthened the already deepening relationship with Japan. Crucially, Abbott secured a long-contested <a href="https://www.dfat.gov.au/geo/japan/japan_brief.html">Economic Partnership Agreement</a> (EPA) with Japan. While the EPA is highly compromised, with <a href="http://www.abc.net.au/news/2014-04-08/political-reaction-to-japan-free-trade-agreement/5374802">criticism mounting</a> from various sectors as specific details of the agreement emerge, it does promise substantial economic benefits, including wider access to Japanese markets than enjoyed by any other country.</p>
<p>As well as the EPA, plans for closer military and intelligence co-operation are bringing the security partnership between Japan and Australia ever closer towards the level of a military alliance in practice, if not yet formally in name. </p>
<p>However, closer security ties <a href="http://www.lowyinterpreter.org/post/2014/04/11/Australia-Japan-relations-Abbott-risks-entrapment.aspx?COLLCC=146160150&">raises concerns</a> over Abbott’s uncritical embrace of Japanese prime minister Shinzo Abe’s revisionist nationalism. This is especially so as it becomes more likely that the Abe government will soon reinterpret Japan’s constitution to allow participation in “collective self-defence”.</p>
<p>While not sharing the same level of security co-operation, Australia’s relations with Korea have also been reinforced. Abbott’s visit to Seoul saw the formal signing of the previously agreed <a href="http://www.dfat.gov.au/fta/kafta/">free trade agreement</a> (FTA) between Australia and Korea and <a href="http://www.abc.net.au/news/2014-04-09/prime-minister-tony-abbott-to-tour-korean-demilitarised-zone/5376664">condemnation</a> by Abbott of North Korea as an “outlaw state which is a threat to world peace”. Abbott <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbott-stared-down-by-north-korean-soldiers-as-he-visits-the-dmz-20140409-zqsmo.html">“faced off”</a> against North Korean soldiers on a visit to the demilitarised zone that divides the Koreas.</p>
<p>China continues to be the far more complex and potentially fractious relationship for Australia to negotiate. While <a href="http://www.theguardian.com/world/2014/apr/08/tony-abbott-cites-chemistry-with-japan-but-the-reaction-will-be-from-china">highly displeased</a> with Australia growing closer to Japan, China may yet be willing to overlook this in order to gain any benefits from a potential FTA.</p>
<p>Securing preferential access to Australian commodities would assist China’s ongoing economic growth, and so allow the upgrading of the People’s Liberation Army to progress. With a large <a href="http://www.news.com.au/finance/business/james-packer-kerry-stokes-and-andrew-forrest-tour-asia-with-tony-abbott/story-fnda1bsz-1226871241366">business delegation</a> in tow, Abbott sought to reassure Beijing over Australia’s closer ties with Japan. He <a href="http://www.theguardian.com/world/2014/apr/10/tony-abbott-goes-to-china-to-be-friend-not-chase-deals">declared</a> at a business forum in Boao that:</p>
<blockquote>
<p>Australia is not in China to do a deal, but to be a friend. </p>
</blockquote>
<p>Notably, though, Australia and China are not “best friends”. Abbott has <a href="https://www.youtube.com/watch?v=XgixA3eQ2Dg">already handed Japan</a> that label.</p>
<p>While a FTA with China, Australia’s largest trading partner, may not have been concluded yet, much diplomatic progress appears to have been made towards reaching that goal. This culminated in Abbott <a href="http://www.abc.net.au/news/2014-04-11/tony-abbott-meets-chinese-president-xi-jinping/5385454">meeting</a> with Chinese president Xi Jinping. Easing restrictions on investment in Australia by Chinese state-owned corporations may be the <a href="http://www.demystifyingchina.com.au/reports/demystifying-chinese-investment-2014.pdf">last hurdle</a> to clear for a FTA to be finally completed.</p>
<p>Abbott has imposed a <a href="http://www.afr.com/p/national/china_wary_of_abbott_harder_foreign_T7OMNjjnwS1JnSoe0jsZVM">September deadline</a> to complete the trifecta of northeast Asian FTAs.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=507&fit=crop&dpr=1 754w, https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=507&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/46253/original/ksmrbwtf-1397267439.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=507&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">China continues to be the region’s more complex and potentially fractious relationship for Australia to negotiate.</span>
<span class="attribution"><span class="source">EPA/Parker Song</span></span>
</figcaption>
</figure>
<p>The Abbott government can take credit for finally signing EPAs with Korea and Japan, and for making progress on one with China. It achieved what Labor failed to finalise given that FTA negotiations with Japan commenced in 2007. The talks with Korea and China began in a similar timeframe. </p>
<p>In its defence, Labor could claim the efforts of the Rudd-Gillard governments were instrumental in progressing the instigation and eventual achievement of the agreements, particularly under <a href="http://www.trademinister.gov.au/releases/2012/ce_mr_120530.html">former trade minister Craig Emerson</a>. But whichever party was in power, it was diplomats from the Department of Foreign Affairs and Trade who primarily conducted the long, unglamorous bureaucratic slog of the negotiations. </p>
<p>Nevertheless, it is the government which signs the agreement that gets the triumphant photo opportunity with foreign leaders and the fortunate prestige of securing the final result on their watch. This is particularly the case when the results of negotiations are so uncertain for so long, with the risk of failure at any stage.</p>
<p>Abbott’s FTA missions can be regarded as broadly in sync with America’s overall neoliberal trade agenda in the region. However, the Australia-Japan EPA strengthens the diplomatic hand of Japan in its Trans-Pacific Partnership (TPP) negotiations with the US. It provides the example of a compromise deal on agricultural and other tariffs against the hardline, zero tariff position of the US. </p>
<p>TPP talks between Japan and the US this week <a href="http://mainichi.jp/english/english/newsselect/news/20140410p2g00m0bu038000c.html">failed to reach any agreement</a> ahead of US president Barack Obama’s scheduled visit to Japan later this month.</p>
<p>Beyond regional differences over trade, Australia’s growing defence ties with Japan complement the steadily increasing deployment of US forces to the Northern Territory as part of the America’s <a href="https://theconversation.com/whatever-happened-to-the-pivot-23261">strategic “pivot”</a> of the majority of its maritime forces to the Pacific. The Trilateral Security Dialogue between the US, Japan and Australia already has the potential to firmly entrench a more integrated <a href="http://thediplomat.com/2014/04/unintended-consequences-of-us-alliances-in-asia/">US-led alliance system</a> in the Asia-Pacific. </p>
<p>This alliance could eventually extend to include India if the nationalist Bharatiya Janata Party wins <a href="https://theconversation.com/india-2014-the-mother-of-all-elections-23971">this year’s Indian elections</a>. This may be a possible step towards fulfilling Abe’s vision of a <a href="http://www.project-syndicate.org/commentary/a-strategic-alliance-for-japan-and-india-by-shinzo-abe">“security diamond”</a> alliance among the four major democracies of the Asia-Pacific, aimed at curbing China’s growing maritime assertiveness.</p>
<p>While the US <a href="http://www.nytimes.com/2014/04/11/world/asia/during-hagel-visit-china-showed-its-military-might-and-its-frustrations.html?_r=1">continually denies</a> its pivot is aimed at strategically containing China, it is doubtful that Beijing believes any such reassurances, including those of friendship coming from Abbott. Should Australia finally manage to claim its ultimate diplomatic prize of a FTA with China, its strength could be undermined by the deteriorating geopolitical situation in the Asia-Pacific.</p><img src="https://counter.theconversation.com/content/25377/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Mark does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Prime minister Tony Abbott’s diplomatic and trade mission to northeast Asia can be hailed as a success. Overall, it met its main objectives. The trip has strengthened the already deepening relationship…Craig Mark, Associate Professor of International Studies, Kwansei Gakuin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/255732014-04-12T08:31:07Z2014-04-12T08:31:07ZAsia’s Cauldron: is geography destiny?<figure><img src="https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">Random House</span></span></figcaption></figure><p>How times change. One of the more unexpected ideas to emerge from Tony Abbott’s largely successful tour of northeast Asia is that Australia’s relationship with China can be built on mutual trust. </p>
<p>It’s a nice idea, no doubt, but one that seems strikingly at odds with not only China’s recent behaviour, but Australia’s, too. After all, Australian strategists are currently urging the greatest expenditure on military modernisation ever undertaken in this country. Actions, as they say, speak louder than words.</p>
<p>Nevertheless, the growing consensus in this country is that Australia doesn’t need to make a choice between its geography and its history. Australia can have amicable and productive relationships with countries that see themselves as potential rivals – even foes. </p>
<p>This is a beguiling idea, but is it true? Can Australia have mutually enriching commercial ties with China while simultaneously playing a prominent role in an alliance relationship with the US, which many in China see as designed to contain them?</p>
<p>In the absence of outright conflict, perhaps. But Australia’s behaviour, and that of many of its Asian neighbours, suggests that there aren’t too many regional leaders who are prepared to place much reliance on the emollient words of their counterparts elsewhere. Such scepticism also pervades Robert Kaplan’s latest book, Asia’s Cauldron: The South China Sea and the End of the Stable Pacific.</p>
<p>The unresolved territorial disputes in the South China Sea provide the particular focus for a set of realist arguments about power and what he sees as the implacable logic of geography. As Kaplan spelled out in his earlier book, The Revenge of Geography:</p>
<blockquote>
<p>China’s most advantageous outlet for its ambitions is in the direction of the relatively weak states of Southeast Asia.</p>
</blockquote>
<p>The current volume takes up the story of China’s rise and what he sees as the inevitable desire to extend its power and influence throughout its immediate neighbourhood. Plainly, an Asian region dominated by China would be very different; China is of the region in a way the US is not. America’s role as a so-called “off-shore balancer” has made it more attractive for many of its allies for this reason. </p>
<p>East Asia without an American presence would, Kaplan thinks, be devoid of moral and ideational struggles over the future basis of international order. Kaplan claims:</p>
<blockquote>
<p>It is not ideas that Asians fight over, but space on the map. </p>
</blockquote>
<p>Recent events in Eastern Europe serve as a sobering reminder that occupying the philosophical and ethical high ground may be of little efficacy or comfort when dealing with an autocratic thug who treats international norms and principles with contempt.</p>
<p>A similar calculus informs policy in the South China Sea and helps to explain China’s continuing reluctance to allow legal principles or multilateral institutions to address the region’s long-running and increasingly fraught territorial disputes. </p>
<p>Given China’s growing predilection for exploiting its growing strategic leverage over its weaker neighbours, there is consequently only one option, Kaplan believes:</p>
<blockquote>
<p>…because China is geographically fundamental to Asia, its military and economic power must be hedged against to preserve the independence of smaller states in Asia that are US allies. And that, in plain English, is a form of containment.</p>
</blockquote>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=912&fit=crop&dpr=1 600w, https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=912&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=912&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1146&fit=crop&dpr=1 754w, https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1146&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/46254/original/9zyf6t8t-1397287746.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1146&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Random House</span></span>
</figcaption>
</figure>
<p>Whether you agree with Kaplan’s analysis or not, he does have the great merit of calling a spade a spade. Such language stands in sharp contrast to the circumlocutions that our own policymakers adopt – possibly for very understandable reasons – when dealing with China. Whether their Chinese counterparts will be convinced by our declarations of friendship remains to be seen.</p>
<p>Ultimately, however, it may not matter. China cannot afford to alienate all its neighbours. There are good material reasons for believing that Chinese policymakers may exercise self-restraint. China’s all-important economic development is not going to happen in isolation. Territorial boundaries may still matter more in East Asia than just about anywhere else, as Kaplan claims, but this does not mean that they inevitably dictate national policy choices as a consequence. </p>
<p>Certainly war remains a real possibility in East Asia. But as even Kaplan concedes:</p>
<blockquote>
<p>Beijing’s goal is not war—but an adjustment in the correlation of forces that enhances it geographical power and prestige. </p>
</blockquote>
<p>This is a long way short of the pursuit of territorial expansion that fuelled many of the conflicts of the 19th and 20th centuries. In this regard, at least, the underlying logic of conflict really does seem to have been reshaped by greater economic interdependence.</p>
<p>The big question, as ever, is whether human beings have the capacity to learn from their mistakes and not repeat them. One might have hoped that the proverbial penny had dropped about the ultimate efficacy of war by now. There are good, empirically robust reasons for thinking that it may have, given the remarkable decline in inter-state violence. </p>
<p><em>Any</em> long-term decline in conflict is a refutation of the materially and geographically deterministic logic Kaplan sees as determining our collective fate. Current events in Eastern Europe and the South China Sea in particular provide compelling and consequential experiments that may demonstrate whether such optimism is justified.</p><img src="https://counter.theconversation.com/content/25573/count.gif" alt="The Conversation" width="1" height="1" />
How times change. One of the more unexpected ideas to emerge from Tony Abbott’s largely successful tour of northeast Asia is that Australia’s relationship with China can be built on mutual trust. It’s…Mark Beeson, Professor of International Politics, Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/254492014-04-11T04:36:39Z2014-04-11T04:36:39ZFTA gains slight now, but the real insurance may lie in the future<p>Economists, unlike politicians, <a href="http://www.pc.gov.au/projects/study/trade-agreements/report">are often sceptical</a> about the extent of any net benefits of free trade agreements. Economists are often concerned that such agreements may result in trade diversion rather than trade creation, due to the application of different tariffs on imports from different countries. Consequently, they would be more accurately described as being “preferential” rather than “free” trade agreements. </p>
<p>Politicians, on the other hand, l<a href="https://theconversation.com/japan-and-free-trade-create-twin-challenges-for-abbott-in-china-25149">ike to sign these types of agreements</a> as they provide “announceables” that look substantial and provide an opportunity for fanfare and media coverage. </p>
<p>However, even if the net gains to Australia won in a free trade agreement are minimal, <a href="http://www.inderscience.com/offer.php?id=56583">our research</a> shows they can still be worth signing as a form of insurance against a future rise in protectionist tendencies.</p>
<p>The use of the term insurance in this case means the ability of one government to both bind and restrict the choices of subsequent governments. This applies to all countries that form part of the agreement as well as their successors. </p>
<p>The bias in recent agreements signed by Australian governments is to build in measures more favourable to economic openness. Similar measures have been taken by other countries in the the Asia Pacific. Many countries are fearful of being isolated from a growing new world order comprised of a complex web of preferential trade agreements.</p>
<p>Possible future recessions or depressions could provide momentum for protectionist policies, although the world was fortunate this did not happen during the global financial crisis. Neo-classical theory of trade liberalisation emphasises the importance of comparative advantage. It assumes a flat world where there is little intervention or distortion caused by government. </p>
<p>Whereas, the history of international relations tells a different story of concern and doubt within domestic polities about the intentions of other nations. In creating more preferential trade agreements, governments may well be seeking insurance against future protectionism. </p>
<p>The controversial Investor State Dispute Settlement (ISDS) mechanisms - where investors may take action in an international court against a country’s jurisdiction if it believes it is being denied access to markets - can be thought as a form of insurance against the possible future incentive for sovereign states to appropriate foreign investment. </p>
<p>Including such agreements offers investors from all countries greater surety that there investments will not be confiscated without compensation. Agreements can be crafted in such a way to safeguard the government’s ability to legislate in the public interest on matters such as health, environment, cultural heritage or safety. </p>
<p>The former Labor government accepted the Productivity Commission’s 2010 recommendation against including investor state dispute mechanisms in trade agreements. But the current Coalition government is more open to them. The newly signed South Korea-Australia FTA contains ISDS mechanisms; the Japan-Australia FTA does not.</p>
<p>The current compensation claim by tobacco giant Philip Morris challenge against Australia’s plain packaging laws under the Hong Kong bilateral investment treaty is testing these type of issues. Notably, Philip Morris moved its ownership to Hong Kong, which enabled it to be able to take advantage of this particular investment treaty. </p>
<p>A preferential trade agreement is an interesting device to respond to the governance challenge of how best to manage openness to international trade and investment flows. It provides some surety for governments in their international relations on trade, and in domestic public policy to bind and restrict the actions of future governments, or at least change the playing field for future governments. </p>
<p>For international investors such agreements, where they include provisions for dispute resolution, create new opportunities for binding future sovereign governments.</p><img src="https://counter.theconversation.com/content/25449/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Economists, unlike politicians, are often sceptical about the extent of any net benefits of free trade agreements. Economists are often concerned that such agreements may result in trade diversion rather…Craig Applegate, Assistant Professor in Economics, University of CanberraChris Sadleir, Assistant Professor in Government, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/253162014-04-09T20:43:50Z2014-04-09T20:43:50ZDon’t be misled on Chinese foreign investment: read the facts<p>As Prime Minister Tony Abbott shifts his Asian tour focus to China, it seems likely the threshold for formal approval on Chinese investment in Australia will be <a href="http://www.afr.com/p/national/abbott_set_to_give_green_light_to_anOx7qGFh00u3kTUywpJKM">raised</a> to A$1 billion. </p>
<p>But any move to open the doors to more investment from China seems destined to drive an outbreak of public concern, based more on Chinese whispers than on fact.</p>
<p>A case in point is last month’s outcry about Chinese real estate investors outbidding Australian home buyers, which resulted in the institution of a parliamentary <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=economics/foreigninvestment/index.htm">inquiry</a> by Treasurer Joe Hockey.</p>
<p>The starting point was the publication of the <a href="http://www.firb.gov.au/content/Publications/AnnualReports/2012-2013/_downloads/FIRB-Annual-Report-2012-13.pdf">Foreign Investment Review Board’s 2012/13 annual report</a>. The report listed a figure of A$5.9 billion for Chinese real estate applications that included commercial and residential real estate. This figure was picked up by various media and analysts, some highly respected, and was <a href="http://www.abc.net.au/news/2014-03-17/house-of-reps-to-look-at-foreign-real-estate-investor-rules/5325190">soon being represented</a> as $6 billion worth of actual purchases of Australian real estate by Chinese buyers.</p>
<p>Such misrepresentation is due to a misunderstanding of what Australian Bureau of Statistics and FIRB statistics actually represent and the lack of statistics that specifically report incoming new foreign investment into Australia. </p>
<p>With the non-approval threshold for Chinese investment likely to rise to $1 billion in line with the agreements the prime minister has reached with Japan and Korea, there is likely to be more unrest about Chinese planned and real investment if the available information is not understood and used responsibly.</p>
<h2>The data gap</h2>
<p>While reports and analysis on Chinese investment in Australia mainly draw data from the ABS and FIRB, neither are set up to report on inflowing new investment, such as Chinese investment in the real estate sector.</p>
<p>The ABS international investment position (IIP) account reports annual direct investment stock and flow data from all foreign countries, including China. The bureau carries out a quarterly Survey of International Investment (SII) and collects data on FDI. This approach represents the balance of investment outflows and inflows, but not inflows per se. Moreover, the ABS provides aggregate investment data at the national level and does not give detailed breakdowns for sectors such as real estate.</p>
<p>FIRB’s annual reports present statistics on approved investment in Australia by foreign interests. Investment below FIRB’s approval thresholds is not reflected in FIRB data, unless it is made by state-owned enterprises. </p>
<p>From 2005, FIRB started to report investment applications from China disaggregated by sector. In the context of real estate investment, FIRB requires foreign persons who want to buy land for commercial development or acquire residential real estate in Australia to notify or gain approval before purchase, unless new dwellings are bought from a developer who has obtained pre-approval to sell to foreign buyers. </p>
<p>FIRB approval figures tend to be higher than actual new investment, as they reflect intended and approved investment, some of which may never eventuate. FIRB approval statistics by their nature may include double and multiple counting when more than one investor applies for the same investment project.</p>
<h2>New data sheds new light</h2>
<p>A completely new set of data has been set up by a joint team from KPMG and the University of Sydney Business School in association with the Chinese Studies Centre. This dataset on annual inflows of Chinese direct investment to Australia offers an alternative source of information on real estate investment in Australia. An interactive website built upon this dataset will be launched by the Minister for Trade and Investment, Andrew Robb, in Shanghai today. </p>
<p>Since 2011, KPMG and The University of Sydney have been working on a new database to close a noticeable gap in public information. These data include Chinese direct investments in mergers and acquisitions, joint ventures and greenfield projects, including commercial real estate deals above $5 million. </p>
<p>According to this dataset, in 2013, 20 real estate investment deals were recorded, worth a total of US$1.29 billion and amounting to 14% of the annual Chinese investment inflow. In particular, NSW has attracted the majority of Chinese commercial real estate investment. 77% of this investment has gone into NSW, followed by Victoria (15%), Queensland (5%), and Western Australia (2%). By ownership of the investors, 65% of the investment volume was made by Chinese private enterprises, while 35% was made by state-owned enterprises.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=431&fit=crop&dpr=1 600w, https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=431&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=431&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=542&fit=crop&dpr=1 754w, https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=542&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/45915/original/n5kjcdwy-1397007578.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=542&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>Based on this data it’s clear Chinese real estate investment has a substantial commercial component which adds new real estate to the Australian market.</p>
<p>Additional anecdotal evidence points to the long term nature of Chinese investment which allows buyers to take a long-term stance that might be reflected in higher bidding prices. Finally, in these areas there is little difference between private and state-owned investors who pursue similar projects and compete against each other.</p><img src="https://counter.theconversation.com/content/25316/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As Prime Minister Tony Abbott shifts his Asian tour focus to China, it seems likely the threshold for formal approval on Chinese investment in Australia will be raised to A$1 billion. But any move to open…Hans Hendrischke, Professor of Chinese Business and Management, University of SydneyWei Li, Postdoctoral Fellow, Business School, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/253282014-04-09T05:05:44Z2014-04-09T05:05:44ZTime for Australia to consider Asian lessons on city infrastructure<figure><img src="https://images.theconversation.com/files/45932/original/sp38qxj7-1397018764.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Projects such as the recently-opened Shenzhen North Station in China, serves up Australia some lessons - if we're willing to listen.</span> <span class="attribution"><span class="source">Chris Hale</span></span></figcaption></figure><p>As prime minister Tony Abbott completes a whistle-stop tour of Asia, Australia’s “place in Asia” is an ongoing discussion. </p>
<p>Abbott hailed the <a href="http://www.theguardian.com/world/2014/apr/07/tony-abbott-free-trade-deal-shared-values-japan-australia">“shared values”</a> that enabled Australia’s free trade deal with Japan and now heads to China for crucial trade talks. </p>
<p>But the Australian mainstream sees itself as fundamentally separate from our Asian neighbours across most economic and cultural dimensions.</p>
<p>This mindset is challenging enough in trade and person-to-person ties. Transport infrastructure and city planning just don’t feature sensibly in discussion between Australia and its developed Asian neighbours. </p>
<p>Abbott has invited the Koreans to invest in yet more roads, but we have continuously spurned a long-held Japanese interest in Australian high speed rail opportunities.</p>
<p>Two problematic and emblematic cultural preconceptions hold Australia back from fully engaging with our region in the field of urban planning and infrastructure. </p>
<p>The first is the idea that Asia is “too different” to be relevant to our experience. The second is the even more problematic idea that we have nothing to learn from Asia (while they should presumably listen intently to us).</p>
<p>This intellectual blockage is possibly caused by an Australian infrastructure inferiority complex arising from decades of lost opportunities - rather than some weakness of planning policy or cities in developed Asia.</p>
<p>It also originates from insufficient distinction between developing Asia and developed Asia (incorporating Japan, Korea, Hong Kong, Taiwan and Singapore).</p>
<p>Let’s be real here - Australian cities are planned appallingly and have some of the most unsustainable living patterns and transport outcomes of all the world’s developed cities. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/45890/original/29fkmghq-1396996230.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Nagoya, which has similar population to Sydney or Melbourne, has an efficient metro system and an emphasis on rail travel.</span>
<span class="attribution"><span class="source">Chris Hale, March 2014</span></span>
</figcaption>
</figure>
<p>Places like Melbourne have done okay recently with downtown urban design and renewal. But at a broader scale, we have failed to develop mass transit systems capable of meeting commuter demands. </p>
<p>This hurts our cities and it hurts our trade opportunities in the infrastructure, planning and city design sphere.</p>
<p>Sydney has recently decided on a light rail corridor where a metro was needed. Melbourne struggles to launch any coherent response to rampant ridership growth on trams and trains. </p>
<p>Brisbane remains in cloud cuckoo land with its bus obsession - when only strategic rail-based interventions can shape its future growth.</p>
<p>Australian cities have spent the past 30 years riding the complacency of a car culture based on local vehicle manufacturing. </p>
<p>Major road projects formed the core of cynical pork barrel politics, draining the vast bulk of our infrastructure dollar.</p>
<p>Australians need to take a serious look at what major Asian cities - such as Tokyo - have achieved in infrastructure and urban policy over recent decades.</p>
<p>Tokyo coped with a massive influx of internal Japanese economic migrants during the second half of the 20th century. It did so through radical investment in metro rail, combined with judicious attention to zoning, parklands and community assets, which has led to the dominance of rail as majority mode of travel.</p>
<p>Other cities such as Singapore and Hong Kong have heavily oriented city planning to rail, with new metro stations opening yearly to bring distinct benefits of convenience and livability.</p>
<p>Japan’s high speed rail has also played a core role in that country’s economic and scientific development. Recently the Chinese have invested in a great and growing system of fast inter-city connections.</p>
<p>By contrast, successive Australian governments at all levels have turned their backs on transit as a tool for policy, economic development, and urban structure.</p>
<p>Infrastructure Australia was clearly due for an overhaul, but as a country we can’t afford a replacement that exists only to rubber stamp destructive road pork.</p>
<p>Tony Abbott has said he wants to be the ‘infrastructure prime-minister’ but his reported obsession with the virtues of the private vehicle over public transport can only be understood as an outdated and defeatist ideology. </p>
<p>This thought process has no place in influencing contemporary infrastructure policy.</p>
<p>We should look carefully at the emphasis Asia has placed on high-speed inter-city rail. These systems are now the backbone of advanced economies around the world, while only Americans and Australians remain unconvinced.</p>
<p>By censoring our discussion, we miss out on a fuller appreciation of 21st century infrastructure thinking and urbanism. Some great planning ideas and examples are available right on our doorstep. </p>
<p>Perhaps its time for a little less lecturing, and a little more learning.</p><img src="https://counter.theconversation.com/content/25328/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Hale receives funding from the Carlton Connect Initiative of the University of Melbourne. This also includes funding from: City of Moreland, City of Darebin, and City of Yarra, Grimshaw architects, and MGS architects. Over many years, Chris has been the recipient of meaningful in-kind support from the MTR Corporation of Hong Kong - in the form of data availability, strategic briefings, and access to senior staff time.</span></em></p>As prime minister Tony Abbott completes a whistle-stop tour of Asia, Australia’s “place in Asia” is an ongoing discussion. Abbott hailed the “shared values” that enabled Australia’s free trade deal with…Chris Hale, Lecturer, Department of Infrastructure Engineering, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/251492014-04-09T04:31:25Z2014-04-09T04:31:25ZJapan and free trade create twin challenges for Abbott in China<figure><img src="https://images.theconversation.com/files/45847/original/dkdjfz9t-1396935591.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Achieving a free trade agreement with China would be a major achievement for the Abbott government given the obstacles currently in the way.</span> <span class="attribution"><span class="source">AAP/Daniel Munoz</span></span></figcaption></figure><p>Despite the misgivings of the sceptics, prime minister Tony Abbott’s high-profile, potentially high-risk trade mission to northeast Asia could be a triumph. The free trade agreement (FTA) <a href="https://theconversation.com/australia-japan-fta-finalised-after-long-gestation-25356">with Japan</a> is a major achievement, although Abbott was clearly pushing on a door that was at least partially open. After years of trying, the Abe government finally seemed equally keen to seal a deal because it fitted its own domestic reform agenda.</p>
<p>The mission’s experience in China could be altogether different – not least because of the warmth of its reception in Japan. The seemingly implacable reality in northeast Asia is that economic ties cannot be separated from the geopolitical context in which they are embedded.</p>
<h2>The Japan question</h2>
<p>While Australian officials might be keen to emphasise the pragmatic, <a href="http://www.news.com.au/finance/business/james-packer-kerry-stokes-and-andrew-forrest-tour-asia-with-tony-abbott/story-fnda1bsz-1226871241366">business-oriented nature</a> of Abbott’s mission, their Chinese hosts in particular will be paying very close attention to what is said elsewhere and the impact this may have on their own fractious intra-regional relations.</p>
<p>This is why Abbott’s remark about Japan being Australia’s <a href="https://www.youtube.com/watch?v=XgixA3eQ2Dg">“best friend”</a> in the region went down so badly <a href="http://www.theaustralian.com.au/national-affairs/policy/chinese-experts-warn-abbott/story-fn59nm2j-1226877196204">in China</a>. The symbolism of <a href="http://www.theaustralian.com.au/news/latest-news/pm-to-meet-japans-emperor-at-palace/story-fn3dxix6-1226876273721">Abbott’s address</a> to Japan’s National Security Council will not be lost on China, either. China’s security hawks are already indignant about Australia’s high-profile support of the rebalancing of American forces toward the Asia-Pacific. Closer ties between traditional allies and potential foes will only fuel Chinese paranoia.</p>
<p>Just how peeved the Chinese are with Australian policy could be seen in the reaction to Australia’s <a href="http://foreignminister.gov.au/releases/Pages/2013/jb_mr_131126a.aspx?ministerid=4">relatively mild criticism</a> of China’s recently expanded <a href="https://theconversation.com/chinas-adiz-and-australias-commitment-to-americas-asian-order-20942">Air Defence Identification Zone</a>. On her inaugural visit as foreign minister, Julie Bishop received an <a href="http://www.smh.com.au/federal-politics/political-news/chinas-rebuke-of-julie-bishop-rudest-conduct-seen-in-30-years-says-senior-foreign-affairs-official-20140227-33jid.html">unprecedented public dressing down</a> from her counterpart, Wang Yi.</p>
<h2>Positive signals</h2>
<p>And yet, the signals coming out of Beijing are not all bad. At least some Chinese officials recognise the possible benefits of getting the economic relationship right.</p>
<p>Chinese premier Li Keqiang <a href="http://www.smh.com.au/business/china/china-to-accelerate-australia-free-trade-agreement-20140305-346su.html">suggested</a> in his high-profile, agenda-setting address to the recent National People’s Congress that progress toward a free trade deal with Australia should be accelerated. This may be Beijing’s version of diplomatic good cop/bad cop, or it may be a manifestation of the conflicted and ad hoc nature of the policymaking process in China. </p>
<p>Either way, policy in China toward Australia would seem just as ambivalent at times as Australia’s is toward China. Both parties are compelled to take the relationship seriously, though, no matter how inherently unlikely it may seem given their striking historical and political differences. </p>
<p>China alone accounts for <a href="https://www.dfat.gov.au/geo/fs/aust.pdf">more than 30% of Australian exports</a>, and the proportion continues to grow. Most of this growth is centred on resources, but China is also the <a href="http://www.dfat.gov.au/trade/negotiations/trade_in_agriculture.html">number one market</a> for Australia’s agricultural sector, which is seen by many as a key future growth industry. Even some of the more sophisticated parts of the beleaguered manufacturing sector, such as medical and pharmaceutical products, are becoming more reliant on the Chinese market.</p>
<p>While China is easily Australia’s <a href="http://www.dfat.gov.au/geo/china/china_brief.html">largest trading partner</a>, Australia is <a href="http://www.china.embassy.gov.au/bjng/relations1.html">only seventh</a> on China’s list. China has the greater potential economic leverage, but it is not easily exploited, especially as Australia enjoys the benefits of proximity and reliability.</p>
<p>Chinese policymakers may not like Australia’s strategic priorities and its closeness to the US, but “punishing” Australia might create more problems for China than it solves.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/45850/original/7b64wcyq-1396936555.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">China is Australia’s largest export partner – a relationship that is centred on resources such as coal.</span>
<span class="attribution"><span class="source">AAP/Dave Hunt</span></span>
</figcaption>
</figure>
<h2>Future prospects</h2>
<p>Greater trade and economic interdependence is, of course, a good thing. </p>
<p>There is no doubt that countries that rely on each other economically are likely to behave differently toward one another as a consequence – to a point. Unfortunately, China’s increasingly troubled relationship with Japan also provides a salutary reminder of the limits to this idea. Massive mutual gains from their bilateral trade have not guaranteed cordial relations between the region’s bitterest of rivals and historical foes.</p>
<p>While Australian security policy remains non-negotiable and seemingly impervious to changing strategic realities, it might benefit from being rather more independent. </p>
<p>Holding out the prospect that Australia might be susceptible to the sort of charm offensive that saw the ASEAN states reap unsolicited, unexpected and unreciprocated trade benefits from China might be a useful bargaining chip. As it is, China’s policymakers know exactly what to expect from Australia and how little flexibility there is in certain areas.</p>
<p>Nevertheless, achieving a FTA with China would be a major achievement for the Abbott government. The danger is that having <a href="http://www.abc.net.au/news/2013-10-07/abbott-confident-of-securing-free-trade-deal-with-china/5003086">flagged this</a> as a key performance indicator in advance, they may be prepared to sign even a bad deal for political rather than economic reasons. This would not be unprecedented: the Howard government’s <a href="https://www.austrade.gov.au/Export/About-Exporting/Trade-Agreements/AUSFTA">free trade deal with the US</a> had more to do with <a href="http://inside.org.au/lessons-from-the-australia%E2%80%93us-free-trade-agreement/">geopolitics than economics</a>.</p>
<p>In this regard, at least, John Howard’s <a href="http://www.smh.com.au/federal-politics/political-news/dr-howard-sees-nothing-but-opportunity-in-emerging-world-order-20120410-1wmzq.html">claim</a> about not having to chose between history and geography looks increasingly less persuasive. Plainly, some of our northeast Asian neighbors are doing this all the time with potentially disastrous results. China’s actions and regional importance may yet force Australia’s policymakers to make similar sorts of calculations.</p>
<hr>
<p><em>Editor’s note: Mark will be available to answer questions in an Author Q&A session between midday and 1:30pm tomorrow, April 10 (Australian Eastern Standard Time). Post your comments below.</em></p><img src="https://counter.theconversation.com/content/25149/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Beeson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite the misgivings of the sceptics, prime minister Tony Abbott’s high-profile, potentially high-risk trade mission to northeast Asia could be a triumph. The free trade agreement (FTA) with Japan is…Mark Beeson, Professor of International Politics, Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/251942014-04-08T03:05:25Z2014-04-08T03:05:25ZMeeting in the middle: Australia and Korea in the Asia-Pacific<figure><img src="https://images.theconversation.com/files/45713/original/z6697m2j-1396831681.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tony Abbott will ink a free trade agreement with South Korea on his upcoming visit there as bilateral ties between the two nations continue to expand.</span> <span class="attribution"><span class="source">AAP/Alan Porritt</span></span></figcaption></figure><p>Australia and South Korea are separated by geography, history and culture, but have much in common. They are democracies; their economies are open to the world; and they are allies of the United States.</p>
<p>Bilateral ties are expanding. Koreans are <a href="http://www.tourism.australia.com/markets/market-regions-japan-and-korea-10041.aspx">visiting Australia</a> in record numbers and young Australians are more receptive to Korean pop culture. Despite its growing breadth and depth, however, economic issues are still the driving force in the relationship.</p>
<h2>The politics of trade</h2>
<p>While in Seoul, Australian prime minister Tony Abbott will sign a free trade agreement (FTA) with Korea. This pact was finalised in late 2013 and could be the spark for a <a href="http://www.theaustralian.com.au/news/features/chasing-a-trade-trifecta/story-e6frg6z6-1226870206670">“trade trifecta”</a>. The government announced the completion of a <a href="http://www.abc.net.au/news/2014-04-07/australia-japan-free-trade-deal/5372242">pact with Japan</a> on this visit, and it hopes to complete another with China by the end of 2014.</p>
<p>Australia’s acceptance of an “investor-state dispute settlement” clause broke a deadlock in the FTA talks with Korea. The Gillard government had <a href="http://inside.org.au/philip-morris-australia-and-the-fate-of-europes-trade-talks/">opposed</a> such clauses, which enable firms to bring disputes to an independent, international court of arbitration.</p>
<p>Tobacco giant Philip Morris used dispute settlement mechanisms embedded in another trade pact to take legal action against Australia’s plain packaging laws. The firm claimed that the laws had damaged its interests.</p>
<p>In agreeing to the dispute settlement clause, Abbott parted ways with Gillard and also the Howard government, which also had <a href="https://www.dfat.gov.au/fta/tpp/subs/tpp_sub_tienhaara_100519.pdf">opposed</a> the clause in trade pacts. Abbott thus reinforced his election-night <a href="http://www.youtube.com/watch?v=PJHeLhwTGZw">claim</a> that Australia is “once more open for business”.</p>
<p>Korea, as a trade-dependent economy, pursues FTAs that secure access to key markets. Australia is not a large trading partner for Korea, but it is seen as a steady supplier of agricultural and energy products. </p>
<p>The trade pact will expand Australian farmers’ access to Korean markets, and the Korean government has decided that compensating local farmers is a price worth paying for comprehensive trade agreements.</p>
<h2>The Trans-Pacific Partnership question</h2>
<p>Australia and Korea differ, however, in their views on the <a href="https://www.dfat.gov.au/fta/tpp/">Trans-Pacific Partnership</a> (TPP), a pact being discussed by 12 states.</p>
<p>The US is the leading force in the TPP, and argues that the region needs a standard set of rules to govern traditional forms of trade and also new issues such as intellectual property. Australia is party to the talks, but Korea has not yet joined. </p>
<p>The main reason for Korea’s reluctance seems to be the lack of benefits from doing so. Korea’s network of trade pacts is quite substantial and the TPP will not expand it greatly.</p>
<p>Staying out of the TPP could have big implications. Korea may have to settle for less favourable terms at a later date and it risks annoying the US. Despite fierce <a href="http://www.brookings.edu/events/2014/02/11-asia-pacific-economic-integration">debate</a> about the pros and cons of the TPP and RCEP, Korean leaders have yet to reach a consensus on the matter.</p>
<p>China has not been invited to join the talks. Japan and the US seem intent on arranging a new set of trade rules, and then trying to force China to accept those rules. The US wants its allies to support the pact. Korea, however, is attracted to the proposed <a href="http://www.eastasiaforum.org/2012/08/27/asias-regional-comprehensive-economic-partnership/">Regional Comprehensive Economic Partnership</a> (RCEP), which could result in a looser set of rules to govern trade in the region.</p>
<p>In any case, the TPP will not be completed before America’s mid-term elections in November.</p>
<h2>Regional issues</h2>
<p>Australia and Korea differ in respect to ties with Japan. Abbott has <a href="http://www.brisbanetimes.com.au/comment/tony-abbotts-northeast-asia-tour-could-do-damage-in-china-20140331-zqoxx.html">referred to Japan</a> as “Australia’s best friend in Asia” and a “strong ally”. Japan’s reluctance to fully atone for its wartime past, meanwhile, is a strain on Korean–Japanese ties. Australia has a more benign view of Japan due its geographic, cultural and historic distance from northeast Asia.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/45724/original/9pts6gr5-1396836507.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Japan’s reluctance to fully atone for its wartime past continues to strain Korean–Japanese ties.</span>
<span class="attribution"><span class="source">EPA/Yonhap</span></span>
</figcaption>
</figure>
<p>The <a href="http://www.abc.net.au/news/2013-11-26/19yo-man-fronts-court-over-korean-womans-murder-in-brisbane-cbd/5116434">recent deaths</a> of several young Koreans in Australia has created a stir in the Korean press. Korea is the <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20Dec+2011">third-largest source</a> of overseas students to Australia, behind India and China. It is also a source of skilled migration. </p>
<p>These human links add substance to ties otherwise dominated by economic matters. Abbott will presumably assure his counterparts that Australia values its visitors from Korea.</p>
<p>Abbott’s talks in Korea are an opportunity to enhance bilateral ties, but challenges remain. The remarkable development of Korea’s economy is ending. Korea may be <a href="http://www.koreafocus.or.kr/design3/essays/view.asp?volume_id=147&content_id=105142&category=G">“another Japan”</a>, but in a negative sense.</p>
<p>Korea’s population is ageing, its savings rate has collapsed and its firms have not invested enough in training and skills. Korea is a mature market that is no longer growing quickly. It is therefore less attractive to Australian exporters.</p>
<p>Australia and Korea both worry about the <a href="http://www.blackincbooks.com/books/china-choice-1">emergence of China</a> as an economic and strategic power and the relative decline of the US. These long-standing allies are not likely to defect to China, but Australian and Korean views of the region may start to differ.</p>
<p>The two nations have a lot to learn from each other about living in what could soon become a rough neighbourhood.</p><img src="https://counter.theconversation.com/content/25194/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Hundt does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia and South Korea are separated by geography, history and culture, but have much in common. They are democracies; their economies are open to the world; and they are allies of the United States…David Hundt, Senior Lecturer in International Relations, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/251522014-04-05T03:04:00Z2014-04-05T03:04:00ZAbbott’s pursuit of Japan risks a free trade agreement with China<figure><img src="https://images.theconversation.com/files/45472/original/qqvxhr5d-1396490721.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">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.</span> <span class="attribution"><span class="source">EPA/Mast Irham</span></span></figcaption></figure><p>Prime minister Tony Abbott will be hoping the Japanese leg of his ambitious <a href="http://www.theaustralian.com.au/news/features/chasing-a-trade-trifecta/story-e6frg6z6-1226870206670">trade trip</a> to northeast Asia can replicate the success of securing a free trade agreement (FTA) <a href="http://www.dfat.gov.au/fta/kafta/">with South Korea</a>. </p>
<p>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 <a href="http://www.youtube.com/watch?v=XgixA3eQ2Dg">declared</a> 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.</p>
<p>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.</p>
<h2>The politics of trade</h2>
<p><a href="https://www.dfat.gov.au/geo/japan/japan_brief.html">Japan</a> 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 <a href="http://www.abc.net.au/radionational/programs/rearvision/trading-with-the-enemy-the-australia-japan/3393730">Agreement on Commerce</a>. </p>
<p>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 <a href="http://asia.nikkei.com/print/article/16638">displace Australian industry</a>, given that its car manufacturing is ending. </p>
<p>One of the CEOs accompanying the large Australian trade delegation to Asia is James Packer. He is eager to <a href="http://www.smh.com.au/business/melco-crown-has-japanese-market-in-its-sights-20140126-31gs0.html">set up casinos in Japan</a>, pending their expected legalisation in time for the Tokyo Olympics in 2020.</p>
<p>However, the Japan-Australia FTA is not yet a sure thing. Trade minister Andrew Robb <a href="http://www.farmweekly.com.au/news/agriculture/agribusiness/general-news/tough-talks-over-japan-fta/2693279.aspx">has warned</a> the final round of negotiations will be tough. </p>
<p>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 <a href="http://www.abc.net.au/pm/content/2014/s3977024.htm">retains doubts</a> that an FTA can be successfully concluded.</p>
<p>The determination of Abe to press ahead with his economic stimulus plan, popularly called <a href="https://theconversation.com/abenomics-a-fix-for-japans-ailing-economy-and-a-boost-for-australia-12487">“Abenomics”</a>, 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 <a href="http://thediplomat.com/2014/04/koll-japan-economic-recovery-on-track/">override the farmers’ lobby</a> and internal critics within the LDP, given his current dominance of Japanese politics. </p>
<p>A Japan-Australia FTA suits the wider neoliberal economic agendas of both Abbott and Abe, creating greater momentum towards completing the <a href="https://theconversation.com/trans-pacific-partnership-at-the-frontlines-of-new-geo-economic-contests-13236">Trans-Pacific Partnership</a> regional trade agreement. Both leaders are committed to this too.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=388&fit=crop&dpr=1 600w, https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=388&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=388&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=487&fit=crop&dpr=1 754w, https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=487&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/45482/original/3kn54xhc-1396493932.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=487&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Lower tariffs on Japanese-made cars would no longer displace Australian industry given that car manufacturing in Australia is ending.</span>
<span class="attribution"><span class="source">AAP/Joe Castro</span></span>
</figcaption>
</figure>
<h2>Security ties</h2>
<p>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. </p>
<p>A formal <a href="http://www.nids.go.jp/english/publication/briefing/pdf/2011/146.pdf">Joint Declaration on Security Cooperation</a> was signed between Australian and Japan in 2007, and upgraded in 2010. </p>
<p>This recent history of defence co-operation now has heightened resonance. Abe and the LDP are <a href="http://www.japantimes.co.jp/news/2013/02/16/national/abe-vows-again-to-amend-article-9/#.UzzH3mSSyCU">controversially set</a> on reinterpreting the pacifist <a href="http://en.wikipedia.org/wiki/Article_9_of_the_Japanese_Constitution">Article 9</a> of Japan’s constitution, which restricts the use of force. Abe’s cabinet has <a href="http://www.bloomberg.com/news/2014-04-01/japan-eases-restrictions-on-military-exports-in-abe-defense-push.html">already</a> increased defence spending and eased restrictions on arms exports. An expert review panel is <a href="http://the-japan-news.com/news/article/0001144019">expected to recommend</a> that Japan can exercise its right to participate in collective self-defence with its allies.</p>
<p>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 <a href="http://www.eastasiaforum.org/2011/07/30/australia-and-japan-allies-in-the-making/">conceivably conduct</a> combined combat operations with the US in future.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=428&fit=crop&dpr=1 600w, https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=428&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=428&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=538&fit=crop&dpr=1 754w, https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=538&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/45484/original/jwmkdz6b-1396494448.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=538&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The closer security ties between Australia and Japan are vital but often overlooked.</span>
<span class="attribution"><span class="source">AAP/Jason Reed</span></span>
</figcaption>
</figure>
<p>Abbott welcomes Japan taking a more active role in international security, <a href="http://asia.nikkei.com/Politics-Economy/International-Relations/Tony-Abbott">praising it</a> for sharing similar democratic values with Australia. In his 2009 book <a href="http://www.amazon.com/Battlelines-ebook/dp/B00A33IYI4">Battlelines</a>, Abbott regarded Japan as <a href="http://www.canberratimes.com.au/comment/abbotts-challenge-in-asia-20130911-2tl0t.html">part of the “Anglosphere”</a>. </p>
<p>Reflecting this mutual admiration, Abe is due to make a <a href="http://www.theaustralian.com.au/national-affairs/policy/japan-trade-deal-timed-for-shinzo-abe-visit-in-july/story-fn59nm2j-1226811609679">return visit to Australia</a> 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.</p>
<h2>What might Abbott’s trip achieve?</h2>
<p>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 <a href="http://www.theguardian.com/world/2014/apr/02/japan-should-reflect-on-whaling-ruling-says-tony-abbott">irritant in the relationship</a>.</p>
<p>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 <a href="https://www.businessspectator.com.au/news/2014/3/7/china/bishop-plays-down-chinas-public-rebuke">already angered</a> by Australia effectively siding with Japan in the dispute over the <a href="https://theconversation.com/senkaku-islands-the-latest-battleground-as-japan-gets-tough-under-abe-19650">Senkaku Islands</a>.</p>
<p>Abbott and foreign minister Julie Bishop continue to <a href="http://www.liberal.org.au/latest-news/2014/03/25/prime-minister-address-asia-society-canberra">repeat their optimism</a> 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. </p><img src="https://counter.theconversation.com/content/25152/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Mark does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>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…Craig Mark, Associate Professor of International Studies, Kwansei Gakuin UniversityLicensed as Creative Commons – attribution, no derivatives.