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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

1.1.2 and 1.2.2: South and South-East Asia

Effectiveness indicators

Overview

Key South-East Asian countries underwent significant change during the year. The Philippines and Thailand both experienced transitions to new governments. In Indonesia, relations between the President and parliament were difficult, while secessionist conflict and inter-communal violence occurred in several regions.

Following a period of strong export-led recovery from the East Asian financial crisis, growth in South-East Asia again slowed, in line with weaker world growth. At the same time, intense global competition for capital and an uncertain commitment to economic reform in some countries resulted in a decline in foreign investment levels. In the face of these challenges, Australia’s trade with the region nevertheless improved. The department also continued to emphasise the importance for South-East Asia to maintain open markets, to move forward on economic reform and to promote political stability. The meeting of ASEAN ministers in Chiang Mai in October 2000 revealed an extremely cautious approach on the part of some countries to negotiation of an ASEAN Free Trade Area—Australia–New Zealand Closer Economic Relations Free Trade Agreement (AFTA/CER FTA). Agreement to pursue a Closer Economic Partnership (CEP) was a step in the right direction (see ‘ASEAN and regional issues’).

However, against this backdrop of regional uncertainty and lack of consensus to pursue a regional FTA, the department worked to strengthen bilateral relations with key countries. The commencement of negotiations for a bilateral FTA with Singapore, and progress towards agreement on a scoping study for an FTA with Thailand, highlighted our efforts to develop closer political and economic engagement with the region.

In Indonesia, we sought to consolidate the bilateral relationship and to support democratic institutions in that country. President Wahid’s visit to Australia in June 2001 was a landmark event which demonstrated the commitment of both countries to constructive relations after a difficult period caused by events in East Timor in 1999.

East Timor remained an important focus for the department’s work in South-East Asia, although the country was moving from an emergency to a reconstruction and development phase. The department worked hard to ensure continued strong international support for the United Nations’ efforts to prepare East Timor for nationhood.

In South Asia Click to view related information - opens in new window, we sought to add substance to the political and economic relationship with India. Building on visits last year by the Prime Minister and Australian ministers, the department worked to strengthen institutional links between India and Australia. This included inaugural Foreign Ministers’ talks and agreement to establish a security dialogue. India’s economic reform process continued to generate considerable interest in Australia and the department was active in informing the Australian business community of opportunities arising from that process.

See description below - click image for a larger version

Australia’s Ambassador to Nepal, Crispin Conroy, visits a Direct Aid Program (DAP) project in western Nepal. The project provided extra classrooms and upgraded existing classrooms for a local school.

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Indonesia

The department’s efforts to consolidate the bilateral relationship with Indonesia Click to view related information - opens in new window contributed to several successful high-level visits between the two countries. The visit to Australia of President Wahid in June 2001, the first by an Indonesian President since 1975, marked a further step away from the difficulties the relationship experienced during 1999 and 2000. It built on a series of ministerial visits in both directions and on the regular contact between the department, through the Embassy in Jakarta, and key Indonesian officials and political leaders, including the President himself, the Vice-President, cabinet ministers and members of parliament. The visit provided a basis for the further development of a bilateral relationship based on mutual respect and common interest.

Earlier ministerial level contact supported by the department included a successful Australia–Indonesia Ministerial Forum in Canberra in December 2000 and a visit to Indonesia by Mr Vaile in February 2001. The Forum was attended by five Indonesian ministers and 11 Australian ministers and resulted in agreement on a number of bilateral economic initiatives. Mr Vaile’s visit, during which he was accompanied by representatives from 16 Australian companies, was marked by the announcement of new investment in Indonesia valued at $550 million.

Throughout the year we used our contacts to convey Australia’s strong support for democratic and constitutional processes in Indonesia. We also urged Indonesia’s other major bilateral aid donors and international financial institutions to follow Australia’s lead in focusing assistance on issues such as the strengthening of democratic institutions and the improvement of governance. We expressed our support for Indonesia’s territorial integrity and we consistently urged the Indonesian authorities to protect the human rights of Indonesian citizens, including in Aceh, Irian Jaya and the Maluku provinces.

The East Asia Analytical Unit’s new report on Indonesia, Indonesia—Facing the Challenge, launched by Mr Downer in December, analysed Indonesia’s post-crisis reforms and remaining challenges, identifying emerging commercial opportunities for Australian traders and investors.

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East Timor

The department continued to make a significant contribution to coordinating Australian support for United Nations (UN) efforts to prepare East Timor Click to view related information - opens in new window for independence. We lobbied hard to ensure strong support in the UN Security Council for an appropriate extension to the mandate of the UN Transitional Administration in East Timor (UNTAET). As independence approached, we continued our efforts to maintain international support for East Timor in the post-independence period, including through a successor UN mission.

We took the opportunity of the fourth Donors’ Conference on East Timor, held in Canberra in June 2001, to deliver key messages on the post-independence period, including the need for longer-term planning and for fiscal and administrative sustainability. We provided strong support to the UN’s efforts to establish a modest and sustainable East Timor Defence Force.

Our mission in Dili maintained a close dialogue with UNTAET and the East Timorese and helped deliver Australian support to institutions such as the National Council and the Independent Electoral Commission. Our network of overseas posts was pivotal in delivering messages on Australian policy, including on the need for international support after independence, and in urging donor assistance in key areas, including on refugees in west Timor, human rights and the judicial sector.

The department, including through our mission in Dili, played a key role in negotiations on a new arrangement governing Timor Sea petroleum resources (see sub-outputs 1.1.7 and 1.2.7).

The strength of Australian support for East Timor was underlined by a number of visits supported by the department, including by Mr Downer on the first anniversary of the August 1999 ballot.

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Partnerships with South-East Asia

The department moved quickly to establish links with the new Thai Government following Thailand’s Click to view related information - opens in new window first elections under its new constitution in January 2001. Sustained efforts to engage key members of the new Government culminated in the successful visit to Australia by Foreign Minister Surakiart in July 2001. During the visit, Dr Surakiart confirmed Thailand’s agreement to undertake a joint scoping study on a bilateral FTA. The department also contributed to the negotiation and finalisation of a joint ministerial statement on combating illegal immigration, significantly enhancing cooperation on people-smuggling issues. Successful bilateral meetings supported by the department included a Joint Trade Committee, which provided a useful forum for promoting Australian business interests, and Senior Officials’ Talks. The latter were marked by a convergence of views on most bilateral and regional issues.

The department also moved quickly to establish strong ties with key figures in the Macapagal–Arroyo Administration in the Philippines Click to view related information - opens in new window. Further progress was made on market access issues, following the resolution in June 2000 of a difficult trade dispute over access of tropical fruit into Australia. This resulted in the removal of barriers to Australian cattle exports to the Philippines and the commencement of import risk analyses for bananas and pineapples.

A joint ministerial statement on combating illegal immigration highlighted growing cooperation with Vietnam Click to view related information - opens in new window. The department also contributed to the negotiation and finalisation of a memorandum of understanding on criminal deportations, signed by Mr Ruddock during his visit to Vietnam in June 2001. We continued to monitor the human rights situation in Vietnam and sought to promote observance of human rights through quiet diplomacy and practical initiatives such as technical assistance and training. Sustained promotion of Australian commercial interests yielded positive outcomes, such as a successful international consortium bid for the design and construction of a major sports stadium in Hanoi for the 2003 South-East Asian Games.

Australia’s relationship with Singapore Click to view related information - opens in new window was marked by close cooperation and a commonality of views on many regional and international issues. The third Singapore–Australia Joint Ministerial Committee meeting, held in Canberra in June 2001 and co-chaired by Mr Downer and his Singaporean counterpart, Professor S Jayakumar, underscored the strength and depth of the bilateral relationship. This was further highlighted by negotiations for an Australia–Singapore Free Trade Agreement, which began in January 2001.

We contributed to maintaining the momentum of Australia’s relationship with Malaysia Click to view related information - opens in new window, including through support for the Malaysia Australia Dialogue, held in Perth in October 2000, and the Joint Trade Committee meeting, held in Kuala Lumpur in December 2000. The department’s support for ministerial visits in both directions, including by the Malaysian Minister for Domestic Trade and Consumer Affairs, Tan Sri Muhyiddin Yassin, also helped to broaden political and business contacts. We continued our work on business links, concentrating on education, agribusiness (especially food) and health and aged care services sectors. We encouraged the development of links with the emerging generation of political leaders, including through the visits of four Malaysians under the Special Visits Program.

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South Asia

The department successfully maintained the positive momentum in the bilateral relationship with India Click to view related information - opens in new window which had developed in 1999–2000. The inaugural Foreign Ministers’ Framework Dialogue meeting, involving Mr Downer and India’s Minister of External Affairs and Defence, Jaswant Singh, provided a new forum for discussion of Australian and Indian perspectives on bilateral, regional and global developments. The meeting was the centrepiece of the first ever bilateral visit to Australia by an Indian External Affairs Minister, itself a clear sign of the rapid improvement in relations. The department, in consultation with the Department of Defence, was successful in securing Indian agreement to a new bilateral security dialogue. In addition, the latest round of Senior Officials’ Talks was held in Canberra.

The restoration of a full Australian aid program to India, including through the rapid provision of assistance to relief agencies in the wake of the earthquake in Gujarat, was an important and positive development in the relationship, as was the return of an Australian Defence Adviser to India. While welcoming India’s commitment to a moratorium on nuclear testing, we continued to encourage Indian and Pakistani signature of the Comprehensive Test Ban Treaty.

The department supported an extensive program of ministerial and other senior visits in both directions over the course of the year. In addition to the visit to India by the Prime Minister, Mr Howard, in July 2000, Mr Vaile and Senator Alston led business delegations in October and December 2000 respectively. During his visit, Mr Vaile signed a memorandum of understanding on cooperation between the Australian and Indian information industries, an agreement the department worked hard to develop. As well as the visit by the Minister for External Affairs and Defence, visits to Australia by Indian ministers and senior officials included those by the Minister for Textiles, Kashiram Rana and the Minister for Information Technology and Parliamentary Affairs, Pramod Mahajan. The increased number of visits to Australia reflects growing Indian interest in the bilateral political and trade relationship.

In addition to ministerial and senior officials’ visits, the department supported a parliamentary delegation’s visit to India and Bangladesh in November 2000.

Following a slump in bilateral trade in 1999–2000 resulting from lower global commodity prices, the commercial relationship with India rebounded in 2000–01. Exports grew from $1.5 billion in 1999–2000 to over $2 billion in 2000–01. Growth in Australian exports of coal, copper, wool, cotton and fresh vegetables was supplemented by niche increases in the export of Australian manufactured goods, notably telecommunications equipment. The department disseminated information to the Australian private sector about opportunities arising from India’s economic reform process. We also encouraged a deeper trade policy dialogue with India which recognised, in particular, important common interests in improving the conditions for world agricultural trade.

At the time of writing, the East Asia Analytical Unit was working on a report on Australian business opportunities in India. This report will assess the impact of a decade of economic reform in India, and in particular draw out the trade and investment implications of this process for Australian enterprises.

Relations with Pakistan Click to view related information - opens in new window remained strained as a result of the military takeover in October 1999. The department promoted cooperation on issues of particular concern, including people-smuggling and the continuing large volume of illegal arrivals in Australia from Afghanistan Click to view related information - opens in new window. The department also supported Australian commercial efforts in Pakistan with some success. However, overall bilateral trade declined as a result of lower Pakistani demand for Australian wheat over 2000–01.

The department’s support for Australian business extended to other South Asian markets, with healthy increases in bilateral trade in most markets. We were active, in cooperation with other departments, in securing a deferral of a Sri Lankan Click to view related information - opens in new window ban on the import of genetically modified foods. The department was involved in promoting increased exports to, and Australian investment in Bangladesh Click to view related information - opens in new window.

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Table 2. Australia’s regional trade with South and South-East 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

ASEAN
Indonesia 2,408 3,119 –1.4 2,701 3,277 15.6
Malaysia 2,141 2,506 0.2 3,765 4,177 21.9
Philippines 1,304 1,495 5.5 457 513 14.7
Singapore 4,855 5,997 10.8 4,359 3,898 10.9
Thailand 1,703 2,219 3.1 2,422 2,780 23.7
Vietnam 385 499 20.4 1,726 2,431 51.4
Other ASEAN 71 88 –8.0 230 375 127.4
Total ASEAN 12,867 15,922 4.6 15,660 17,451 20.0
India 1,588 2,086 9.0 714 754 6.5
Other South Asia 1,063 1,143 11.9 288 349 8.6
Total South Asia 2,652 3,229 10.0 1,003 1,103 7.1
Total 15,519 19,151 5.4 16,663 18,554 19.0

Source: Compiled by DFAT from ABS data

ASEAN and regional issues

Australia’s engagement with South-East Asia at a regional level remained an important priority for Australia and therefore for the department’s agenda. The department provided substantial support to Australia’s work in regional architecture, including the ASEAN Regional Forum (ARF) Click to view related information - opens in new window and the July 2000 ASEAN Post-Ministerial Conference held in Bangkok. We also supported Australian participation in the inaugural Forum for East Asia–Latin America Cooperation (FEALAC) held in Santiago in March 2001. FEALAC provides a useful opportunity for Australia to improve its engagement with the Asian region and to strengthen links with Latin America. Australia agreed at the FEALAC meeting to co-chair, with Costa Rica, a working group on education, science and technology.

The department continued to monitor closely emerging regional developments, in particular ASEAN+3 (the ‘3’ being South Korea, Japan and China). Australia welcomed ASEAN+3’s Chiang Mai initiative—which aims to extend the network of bilateral currency swaps and repurchase arrangements among the group’s members—as a positive step in strengthening regional financial architecture. While Australia is not a member of ASEAN+3, we stand ready to play a role in the group’s work, consistent with Australia’s interests, should its members so desire. The department also provided substantial support to the process whereby ministerial agreement was secured to establish an AFTA-CER Click to view related information - opens in new window Closer Economic Partnership at the annual ASEAN-CER Ministerial Consultations in Chiang Mai, Thailand, in October 2000 (Click to view).

The second Coolum Forum, held in August–September 2000, built on the success of the inaugural forum as an opportunity for leaders from East Asian countries to exchange views about key international issues in an informal setting. The 2000 forum, again jointly chaired by Mr Downer and the then Thai Foreign Minister, Dr Surin, focused on the impact of globalisation on the region.

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Burma and Cambodia

The department continued its balanced approach to Burma Click to view related information - opens in new window (Myanmar). Work on Mr Downer’s Human Rights Institution initiative proceeded smoothly, with the first human rights training workshops held in July and October 2000. The workshops exposed middle-ranking Burmese civil servants to international human rights concepts, instruments and standards. An assessment by the workshop convenors concluded that the workshops had achieved their objectives, which included raising awareness of international human rights standards and obligations among Burmese officials and providing an opportunity for the Burmese participants to discuss human rights issues in an open manner. Mr Downer announced that a further four workshops would take place in the second half of 2001. Representatives of Burmese civil society organisations were invited to participate in these workshops for the first time.

The department reinforced the human rights initiative with representations to the Burmese Government about arrests and harassment of opposition groups and other human rights violations. Strong representations were made about restrictions imposed on the leader of the National League for Democracy, Aung San Suu Kyi, in 2000. We also supported the UN Special Representative to Burma, Tan Sri Razali Ismail, in his efforts to promote political reconciliation. We welcomed the talks between Aung San Suu Kyi and the State Peace and Development Council, emphasising our hope that they would lead to genuine progress towards promoting both human rights and political reconciliation in Burma.

The department continued to encourage the Cambodian Click to view related information - opens in new window Government to bring to justice all those responsible for the death of David Wilson. We took an active role, including providing support to the Wilson family, at the trials of those alleged to be involved in his death. Australian representations also led to the suspension from government duty of a former Khmer Rouge commander pending the conclusion of an investigation into his alleged role in the killing of David Wilson. The department continued to encourage a prompt conclusion to negotiations between the Cambodian Government and the United Nations concerning the establishment of a Khmer Rouge tribunal.

The department gave high priority to illegal immigration issues, working closely with Cambodian authorities to prevent people-smugglers using Cambodia as a transhipment point for illegal people movement to Australia. We also reached agreement with the Australian Federal Police to post an officer in Cambodia for a six-month trial period from July 2001 to examine narcotics and other transnational crime issues.

Figure 9. Australia’s merchandise trade with ASEAN

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

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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