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Department of Foreign Affairs and Trade - Annual Report 2000-2001
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OUTPUT 1.1
Protection and advancement of Australia’s international interests through the diplomatic network and Canberra-based activity

OUTPUT 1.2
Provision of policy advice and analysis to Portfolio Ministers

Note: Effectiveness indicators and performance reporting for the following sub-outputs under outputs 1.1 and 1.2 are intended to relate to both these outputs, on the basis that policy advice and analysis and the department’s work through the diplomatic network and Canberra-based activity are closely interlinked and cannot sensibly be separated for reporting purposes.

1.1.1 and 1.2.1: North Asia

Effectiveness indicators

Overview Click to view related information - opens in new window

North Asia includes three of our top four trading partners. Strengthening our cooperation with the countries of this region and contributing to its security are integral to promoting Australia’s international interests.

The department took important initiatives to boost our vital cooperation with Japan across economic, security and regional links. Chief among these was the successful Australia–Japan Conference for the 21st Century, which brought together leading figures in both countries to chart the future of the relationship. The subsequent visits to Japan by Mr Downer and Mr Vaile bolstered these efforts. The department also gave vital support to the visit by Deputy Prime Minister John Anderson to China to promote our economic and political interests there. We supported Mr Downer’s visit to South Korea for the inaugural Australia–Korea Foreign Ministers’ meeting, a consolidation of the consultation process in our important bilateral relationship.

North Asia’s economic importance to Australia increased in 2000–01. Exports jumped 25 per cent to over $49 billion. The rise in trade with China and South Korea was particularly strong. The department took steps to enhance Australia’s economic relationships with the region. We launched studies into ways to develop our partnerships with Japan and South Korea. We convened the Australia–Japan Conference and are pursuing its recommendations, including exploring the scope for a trade and investment facilitation agreement with Japan. With South Korea we launched a new mechanism—the Ministerial Joint Trade and Economic Commission, a ministerial forum to focus on commercial aspects of the relationship. Initiating studies with Korea on a strengthened economic partnership was one outcome of the Commission’s first meeting. We also reached in-principle agreement with China to enhance the bilateral trade and investment relationship, including through a number of trade and investment promotional events after China joins the WTO, targeting particular sectors that offer the most promising prospects for Australian business.

On security issues, we deepened Australia’s engagement with North Korea as a means of supporting the peaceful resolution of tensions on the Korean Peninsula. The department supported historic visits by Mr Downer to North Korea and a return visit to Australia by the Foreign Minister of North Korea, Mr Paek Nam-sun. Australia and North Korea have now announced their intention to open resident embassies in Canberra and Pyongyang.

The department promoted human rights in China by continuing to raise specific concerns, convening a fourth round of the annual human rights dialogue and supporting the associated technical cooperation program. The fourth dialogue saw broader and deeper Chinese cooperation than during previous rounds.

See description below - click for a larger version

Former Australian Ambassador to Japan, Peter Grey (right), and Meat and Livestock Australia (MLA) Tokyo representative, Neil Butler, look on as Minister for Trade, Mark Vaile, promotes ‘Aussie Beef’ during a visit to a supermarket in Tokyo in June 2001.

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Japan Click to view related information - opens in new window

The department took fresh steps to enhance Australia’s cooperation with Japan. We played the lead role in organising and supporting the Australia–Japan Conference for the 21st Century. Held in Sydney on 29 and 30 April 2001, the conference brought together 47 leading figures from the government and private sectors of both countries to find new ways of deepening our already impressive and extensive bilateral relationship. Ahead of the conference, the department and the Japanese Government commissioned parallel studies investigating specific means of enhancing trade and economic relations. Launched at the conference, the Strengthening Economic Relations (SER) reports recommended measures to boost trade, especially in the information and communications technology and services sectors. The department, in consultation with the Japanese Government and stakeholders, is advancing the recommendations of the SER study and the conference, including the recommendation that Japan and Australia conclude a trade and investment facilitation agreement.

Visits to Japan by Mr Downer on 28 and 29 May 2001 and Mr Vaile from 2 to 5 June 2001, organised by the department, built on the momentum that the conference had generated. The visits also established a sound working relationship with the new, reform-minded Government of the Prime Minister of Japan, Mr Junichiro Koizumi. The department continued our close dialogue with Japan on important regional developments, such as East Timor, Indonesia, the South Pacific and the broader regional security environment, ensuring that Australian positions were well understood and advancing cooperation that serves our regional interests. We worked closely with Japan on international and United Nations issues, particularly with respect to climate change, arms control and disarmament matters.

Australia’s support for a new round of world trade talks, and how both countries could work to achieve this, featured prominently in discussions, along with our mutual interest in ensuring that APEC continues to play a key role in delivering regional trade and investment liberalisation and supporting economic reform.

The department made a crucial contribution to resolving the long-standing dispute between Australia and Japan over southern bluefin tuna. Supporting other agencies, our role—developing a plan to resolve the dispute and negotiating with the Japanese Government—facilitated the conclusion of the dispute. Agreement over southern bluefin tuna removes a considerable irritant in the bilateral relationship. It will also help ensure conservation of the tuna stock through establishing sustainable fisheries management practices within the Commission for the Conservation of Southern Bluefin Tuna.

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China Click to view related information - opens in new window

The vigorous and rapidly growing economic and trade ties we share with China are underpinned by the strong bilateral political relationship. The department put considerable effort into securing successful high-level exchanges, which are particularly important in this relationship, especially the annual cycle of meetings of senior leaders and ministers. The department played a key role in initiating, organising and planning the visit of Deputy Prime Minister John Anderson to China in April 2001. Mr Anderson’s calls on high-level decision-makers advanced our insurance and liquefied natural gas (LNG) supply interests but outcomes are not assured and further work continues. Both Mr Downer and Mr Vaile met their counterparts at APEC ministerial meetings during the year, helping to strengthen our dialogue on regional economic and security issues.

While the relative paucity of high-level visits from China was disappointing, the department bolstered high-level contacts by lending active support to visits by six Australian ministers to China. These visits raised Australia’s profile in sectors of the economy where our capacities and Chinese needs match: information and communications technology, environmental technology, health care training and health insurance. The department also made efforts to position Australia to benefit from Olympics-related business opportunities, ahead of the announcement that Beijing would host the 2008 Olympic Games. These included supporting visits over the year by the Premier of NSW, Mr Bob Carr, the Chief Minister of the ACT, Mr Gary Humphries, and former Minister for Trade, Mr Tim Fischer. These visits highlighted Australian skills, as demonstrated in the Sydney Games, that would be of direct benefit to Beijing’s preparations for the 2008 Games,

The department assisted the visit to China of the Minister for Defence, Mr Peter Reith, in February 2001. This reinforced the important dialogue on defence and strategic matters that Australia and China are developing. The visit by General Zhang Wannian, second-in-command of the People’s Liberation Army, highlighted the strength of the bilateral defence dialogue. Through this dialogue and through the department’s annual senior officials’ talks, we ensured that Australia’s views on regional security issues continued to be well understood by China, including our support for China and Taiwan resolving their differences through resumption of peaceful dialogue. The good channels of dialogue we maintain ensured effective management of any misunderstandings arising from differences between China and the United States over the collision of Chinese and US aircraft near Hainan Island and from the transit of the Taiwan Strait by Royal Australian Navy ships.

In May 2001, the department and the Chinese Ministry of Foreign Affairs reviewed the first year of operation of the bilateral Consular Agreement signed during President Jiang’s visit. The review noted that Australian diplomatic missions in China are now able to offer significantly more effective consular assistance to Australians in China. Agreement was reached on redistribution of consular districts in both China and Australia to facilitate more efficient delivery of consular services.

Promoting human rights in China Click to view related information - opens in new window

The Chinese human rights situation continues to elicit strong public concern in Australia. Departmental staff continued to monitor the situation closely. They also consistently raised cases of alleged violations with the Chinese authorities, and evidence indicates that the treatment of some persons may have improved as a result. We also ensured that Australia’s concerns were heard at a high level, including during ministerial visits by Senator Alston and Dr Wooldridge, as well as at the United Nations.

The fourth round of the department’s bilateral Human Rights Dialogue was held in Canberra in August 2001. It addressed fewer themes, but in greater depth. These were: the administration of justice; ethnic and religious minorities; and women’s and children’s rights. Although the causal relationship should not be overstated, evidence suggests that the dialogue and its associated technical cooperation program have begun to achieve moderate—but significant—results, particularly in the administration of justice and in women’s rights. Other Australian and Chinese government agencies have given feedback that Australia’s dialogue process is beginning to assist the transfer of knowledge, skills and attitudes that are the essential first steps in developing a human rights culture.

The breadth and seniority of its participation distinguish the dialogue. We conduct our dialogue at Deputy Secretary/Vice Minister level, higher than any other country. No other country’s dialogue process appears to have engaged as many of the key Chinese government agencies—including relevant policy agencies. The range of Chinese government agencies at the fourth round was the broadest since the dialogue began, including for the first time representatives of the Ministry of State Security and the National People’s Congress. The department aims to sustain and improve the dialogue’s incremental progress as relationships mature.

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Korean Peninsula

The department organised three important visits that deepened Australia’s engagement with the Democratic People’s Republic of Korea (DPRK or North Korea) Click to view related information - opens in new window and raised Australia’s profile as a country committed to promoting stability in North Asia. Mr Downer’s visit to the Republic of Korea (ROK or South Korea) Click to view related information - opens in new window in May 2001 and discussions with President Kim Dae-jung reinforced our strong support for President Kim’s policy of engagement with the DPRK and enhanced our dialogue on other regional issues. Mr Downer’s visit to the DPRK in November 2000 and the return visit to Australia by the Foreign Minister of the DPRK, Mr Paek Nam-sun, in June 2001, was the first ever exchange of ministerial visits. The exchange built on Australia’s resumption of relations with the DPRK in May 2000. The visits demonstrated Australia’s support for the North–South peace process. They allowed Australia to urge the DPRK to improve exchanges with the ROK and take positive steps on other security issues, including nuclear and missile concerns. The visits intensified Australia’s engagement with the DPRK through:

Buttressing the announcements of ministers, the department:

Both the ROK and the United States expressed support for Australia’s heightened engagement with the DPRK.

Table 1. Australia’s regional trade with North Asia

EXPORTS

IMPORTS

1999-00
($M)
2000–01
($M)
Trend Growth
1995–96 TO
2000–01
1999–00
($M)
2000–01
($M)
Trend Growth
1995–96 TO
2000–01
Japan 18,822 23,479 6.9 14,110 15,371 8.3
ROK 7,615 9,209 5.4 4,311 4,710 16.0
Taiwan 4,696 5,871 10.3 3,244 3,327 6.1
Hong Kong 3,211 3,904 3.0 1,280 1,367 8.8
China 4,966 6,846 12.0 7,515 9,881 20.0
Other 21 36 15.4 14 12 –2.2
Total North Asia 39,332 49,344 7.2 30,473 34,667 11.7

Source: Compiled by DFAT from ABS data

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Economic relationships in North Asia

Market access issues for Australian companies in Japan Click to view related information - opens in new window featured prominently in our bilateral agenda, with the department working hard to secure equal and fair conditions particularly for agricultural products, and on standards and regulatory issues. Despite ongoing efforts, we were unable to gain market access for bovine semen or to have Japan liberalise its state-controlled import system on certain milk powders and dairy products. The World Customs Organization also ruled in Japan’s favour in a dispute over high fat cream cheese, determining that certain cheeses should be classified as dairy spreads. The resultant tariff increase from 30 percent to over 500 percent reduced the market for some Australian high fat cream cheese products.

Our achievements in Japan included contributing to:

Figure 5. Australia’s merchandise trade with Japan

Click for a larger version. This information is available as an image only - a paper copy is available by phoning (02) 6261 3114 or from Ausinfo bookshops or by visiting www.ausaid.gov.au/publications

Source: Compiled by DFAT from ABS data

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The department sought to build on our rapidly deepening economic relationship with China Click to view related information - opens in new window. Exports surged to almost $7 billion in 2000–01, up almost 38 per cent on 1999. China’s imminent WTO membership potentially affords increased trade and investment opportunities. In addition, the intensification of the internal economic reform process as a result of WTO accession should contribute to a more transparent and predictable business environment. The department worked to create opportunities for Australia to benefit from China’s economic transformation. Through talks at the intersessional Joint Ministerial Economic Commission meeting in October 2000 and subsequently, we secured China’s in-principle agreement to enhance the bilateral trade and investment relationship, including through a number of trade and investment promotional events after China joins the WTO, targeting particular sectors that offer the most promising prospects for Australian business. The events will alert Australian industry to opportunities in China, including the opportunities that flow from China’s WTO entry, and will provide an early platform for Australian business to showcase their capabilities after China’s WTO accession.

Our other achievements in China included:

Figure 6. Australia’s merchandise trade with China

Click for a larger version. This information is available as an image only - a paper copy is available by phoning (02) 6261 3114 or from Ausinfo bookshops or by visiting www.ausaid.gov.au/publications

Source: Compiled by DFAT from ABS data

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The department took significant steps to enhance our burgeoning economic relationship with South Korea. Exports to South Korea Click to view related information - opens in new window jumped almost 21 per cent in 2000 to $9.2 billion. We hosted the inaugural Ministerial Joint Trade and Economic Commission meeting in Canberra in October 2000. The Commission provided a top-level governmental forum for discussing major market access concerns with South Korea and provided opportunities for business to canvass market access issues directly. The Australia–Korea Foundation (AKF) commissioned a study to identify ways to strengthen the bilateral economic partnership. The study will focus on new opportunities and complementarities flowing from changes in our economies. A parallel study was commissioned by the Korean Government. Both studies are due to report by end-August 2001. A key element of the studies will be to raise Australia’s profile as a country with expertise in new economy sectors such as information and communications technology.

On market access issues, the department, working with other agencies:

Figure 7. Australia’s merchandise trade with the Republic of Korea

Click for a larger version. This information is available as an image only - a paper copy is available by phoning (02) 6261 3114 or from Ausinfo bookshops or by visiting www.ausaid.gov.au/publications

Source: Compiled by DFAT from ABS data

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Sustained effort over the past two years to diversify trade and increase two-way investment with Taiwan Click to view related information - opens in new window began to bear fruit, with the level of Taiwanese investment in Australia doubling in 2000. The department provided support for a business mission led by Mr Vaile, who visited Taiwan unofficially in February 2001 to explore commercial opportunities in high technology, agribusiness and transport and to promote Australian capabilities, including LNG supply. Two further rounds of the annual bilateral Economic Consultations resulted in a consolidation of the institutional framework for developing a strong economic partnership with Taiwan.

The department contributed to the following notable outcomes during the year:

Further work will be needed to finalise the text of an Investment Promotion and Protection Arrangement, which has been under negotiation for two years.

Figure 8. Australia’s merchandise trade with Taiwan

Click for a larger version. This information is available as an image only - a paper copy is available by phoning (02) 6261 3114 or from Ausinfo bookshops or by visiting www.ausaid.gov.au/publications

Source: Compiled by DFAT from ABS data

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Hong Kong Click to view related information - opens in new window investment interest in Australia is strong, reaching $24.6 billion by 30 June 2000 (latest available figures), a 37 per cent increase on the previous year. The main areas of investment were regional service centres and major infrastructure projects. Promotion efforts by the department built on this interest in Australia. We supported a visit to Hong Kong by Mr Downer on 31 May and 1 June 2001 to advance our economic interests. We facilitated cooperation with Hong Kong in the financial services sector, including progress on mutual recognition projects between the Australian Securities and Investments Commission and the Hong Kong Securities and Futures Commission. We facilitated progress on a working holiday-maker visa scheme to be concluded later in 2001. We focused on promoting Australian foods and beverages, including supporting Australia’s largest ever participation in the Hong Kong Food Exhibition, Asia’s premier food exhibition.

The department contributed to the following notable market access outcomes during the year:

The department also worked hard to promote Australia’s expertise in environmental services in Hong Kong, but more work needs to be done with Australian exporters on market development.

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Economic analysis

As outlined above, the department commissioned two significant studies into the economic relationships with Japan (Strengthening Economic Relations) and Korea (Strengthened Economic Partnership). The studies analyse developments in these two important economies and examine ways in which Australia can deepen our trade and economic relationships with them. The department also undertook its own analysis of China’s economy and trade opportunities, to develop proposals to secure benefits from China’s economic modernisation and WTO accession. One such proposal that we will pursue in the coming year is the convening of conferences concentrating on particular industries, as outlined earlier in this section. We assisted Australian industry by providing ongoing analysis of Australia’s prospects of supplying LNG to China, Japan, the ROK and Taiwan, including detailed coverage of China’s process of selecting the foreign supplier for its first LNG project in Guangdong.

The department’s East Asia Analytical Unit began work on a report on Australian business opportunities in China, with a particular focus on analysing the opportunities afforded by China’s WTO accession. The unit also began a report on corporate governance across East Asia, including North East Asia, aimed at informing Australian business of new regulatory and market regimes confronting investors, both direct and portfolio, into the region.

Reporting against quality and quantity indicators and administered items begins on page 103. The financial and staffing resources summary for outcome 1 is at Appendix 2.

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