Department of Foreign Affairs and Trade :: 2001-2002 Annual Report

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Output 1.1:

Protection and advocacy of Australia's international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.2 South and South-East Asia

Overview

The department maintained a strong focus on advancing Australia's strategic and economic interests in South-East Asia and South Asia. We continued to play a leading role in building Australia's political, trade, security and people-to-people links with regional countries.

South-East Asia enjoyed a period of relative political stability and, after a low rate of growth in 2001, a moderate economic recovery in 2002. The accession to office of President Megawati Sukarnoputri in Indonesia brought a sustained effort to build links with her government. The department was centrally involved in this, including through support for highly successful visits of the Prime Minister, Mr Downer, Mr Vaile and other ministers. A highlight of the year was East Timor's achievement of independence on 20 May 2002. We provided significant support throughout the transition.

The consequences of the 11 September 2001 terrorist attacks, the discovery of a terrorist cell in Singapore and the arrests of suspected terrorists in Malaysia and the Philippines heightened our efforts to encourage regional cooperation against terrorism. We supported negotiation and conclusion of memorandums of understanding on counter-terrorism with Indonesia and Malaysia, successfully negotiated a similar memorandum with Thailand and increased our counter-terrorism cooperation with other regional countries.

Australia's two-way merchandise trade with ASEAN countries grew strongly in 2001-02 to $32.5 billion, surpassing pre-1997 financial crisis levels. The department continued to emphasise to ASEAN countries the importance of implementing their economic reform and restructuring agendas. We made significant progress in developing the framework for an ASEAN Free Trade Area-Australia-New Zealand Closer Economic Relations Trade Agreement (AFTA-CER) Closer Economic Partnership (see sub-output 1.1.6 at page 74 for further detail). Negotiations on a bilateral free trade agreement (FTA) continued with Singapore. We started negotiations on a comprehensive 'FTA plus' with Thailand (see sub-output 1.1.5 at page 67 for further detail on FTAs).

South Asia was dominated by developments in Afghanistan following the 11 September 2001 terrorist attacks and heightened tensions between India and Pakistan. The department worked vigorously to protect Australia's strategic and consular interests. While the security situation between India and Pakistan posed complications, we continued to strengthen Australia's links with India. We also facilitated normalisation of relations with Pakistan.

Australian exports to South Asia increased by 14 per cent to $3.7 billion in 2001-02. The department continued to promote Australia as a reliable supplier of the industrial raw materials and foodstuffs, high technology and services which South Asian countries increasingly require as their economies grow.

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Indonesia

The department worked to consolidate a mature and realistic bilateral relationship with Indonesia, based on constructive government-to-government links, expanding trade and investment, and cooperation on regional issues, including people smuggling. We supported a large number of high-level visits, including two visits to Indonesia by the Prime Minister, three visits by Mr Downer, a visit by Mr Vaile and a range of other ministerial visits in both directions. These visits achieved a strong mutual commitment to advancing the relationship and good outcomes, including on trade and counter-terrorism.

This productive ministerial contact also provided a solid foundation for working with Indonesia in tackling regional issues. Australia and Indonesia co-hosted a Regional Ministerial Conference on People Smuggling, Trafficking in Persons and Related Transnational Crime (see sub-output 1.1.7 at page 82 for further detail). The department facilitated closer regional cooperation through Mr Downer's attendance at the inaugural Trilateral Meeting of Indonesia, East Timor and Australia, which marked an important step in improving regional stability and security. We participated in the first senior officials' meeting to take forward the South West Pacific Dialogue (involving Australia, East Timor, Indonesia, New Zealand, Papua New Guinea and Philippines) as a forum to foster member countries' cooperation on a range of regional issues.

Through our high-level engagement, including sustained advocacy by our mission in Jakarta, we encouraged Indonesia's continued commitment to its political, economic and legal reform programs. We provided practical support through Australia's bilateral aid program and multilaterally, including through international financial institutions. We promoted Australian commercial interests through advice and other assistance to the private sector and our facilitation of Mr Vaile's attendance at the annual bilateral business council meeting. We worked to defend Australian commercial interests in Indonesia, including in wheat and wheat flour exports. In 2001-02, two-way merchandise trade expanded to $7.2 billion, its highest point ever.

Minister for Trade Mark Vaile with his Indonesian counterpart, Rini Soewandi, during Mr Vaile's visit to Bali for the annual Australia-Indonesia Trade Ministers' Meeting in March 2002.

While reaffirming Australia's support for Indonesia's territorial integrity, we urged the Indonesian authorities to address separatist and sectarian conflicts through peaceful means and with regard for human rights. We welcomed the special autonomy agreements in Papua and Aceh, and the Malino peace agreements in Central Sulawesi and Maluku, and advocated continuing commitment to their implementation.

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East Timor

The department made a significant contribution to East Timor's transition to independence on 20 May 2002. We lobbied successfully in the UN Security Council and in various capitals to secure agreement for a UN mission to assist East Timor in its crucial first years of independence. Our overseas missions were instrumental in encouraging continued international attention to East Timor and urging donor assistance in key areas.

The department facilitated arrangements for Australia's high-level delegation to East Timor's independence celebrations, led by the Prime Minister, Mr Howard. We also made arrangements for two parliamentary delegations to observe elections in August 2001 and April 2002, demonstrating Australia's commitment to the development of democracy in East Timor. The department worked to achieve establishment of diplomatic relations and the opening of an embassy on the first day of independence. We contributed to the organisation of President Xanana Gusmao's inaugural visit to Australia in June 2002.

Through advocacy and practical assistance, we worked to support East Timorese leaders in focusing on responsible fiscal management, poverty reduction, and the creation of an enabling environment for private sector development. The department coordinated Australia's contribution, bilaterally and through the UN, to help establish a modest and sustainable East Timor Defence Force and Police Service and strong institutions of democratic governance. In addition to aid and defence links, we fostered counterpart relationships in immigration, quarantine, national security and police liaison. The department was also instrumental in negotiations to achieve the signing on 20 May 2002 of the Timor Sea Treaty (see sub-output 1.1.7 at page 83 for further detail).

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Partnerships with South-East Asia

The department supported the continued building of strong practical links between Australia and Malaysia . We organised a successful meeting of the Joint Trade Committee between Mr Vaile and his Malaysian counterpart in August 2001, which resulted in agreement to work together in the halal food sector. We supported a significant number of ministerial visits in both directions, which demonstrated the strength and diversity of government-to-government links. We also supported a visit by the Chief Minister of Sarawak for the launch of the Australia-Malaysia Foundation, a private sector initiative that will further strengthen the network of links between Australians and Malaysians. Building on the good cooperation that has been developed with Malaysian counterpart ministries, the department worked effectively to protect Australian trading interests in livestock and steel. We also helped advance bilateral cooperation on people smuggling and terrorism.

We continued to advocate Australia's interests in the broad-based relationship with Singapore . We worked to enhance the already substantial trade and investment relationship. Ongoing negotiations on a bilateral FTA were a major focus. The department drew on the strong bilateral links to advance cooperation with Singapore on people smuggling, terrorism and other regional issues.

The department's work to strengthen relations with Thailand culminated in our contribution to the successful visit to Australia of Prime Minister Thaksin Shinawatra in May 2002. Sustained advocacy by the department contributed to the main outcomes of the visit: agreements to negotiate a comprehensive 'FTA plus'-to encompass market access, trade, and investment facilitation-and a bilateral memorandum of understanding on counter-terrorism cooperation. Our productive relationships with key Thai agencies reinforced Thailand's commitment to working with Australia on efforts to combat people smuggling. We also contributed to the finalisation of a Prisoner Transfer Agreement which Mr Downer and his Thai counterpart signed in July 2001.

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The department pursued opportunities to advance our links with the Philippines , including upgrading the Philippines-Australia Dialogue to a joint meeting of foreign and trade ministers. We convened in June 2002 the Joint Commission Meeting of senior officials, which identified mutual interests in advancing a broad range of trade and investment issues. The department contributed to whole-of-government efforts to support our broader trading interests in the Philippines, including emphasising-in response to some expressions of concern-the science-based integrity of Australia's quarantine procedures.

The inaugural bilateral human rights dialogue in May 2002 highlighted the increasing maturity of Australia's relations with Vietnam . The department's success in engaging the Vietnamese Government on people smuggling issues was demonstrated by the return of 31 Vietnamese nationals who had arrived in Australian waters illegally. We made good progress in negotiating a bilateral consular agreement. Assiduous promotion of Australian commercial interests yielded positive outcomes, including securing conditions for expanding live cattle exports.

The department continued to implement Australia's approach of engaging Burma (Myanmar) to encourage positive change. We supported four more human rights workshops in the second half of 2001 for 100 Burmese mid-level officials and civil society representatives. We made strong representations about the need to free all political prisoners and address other serious human rights violations. The department supported efforts to promote political reconciliation, including by the UN Special Envoy to Burma (Mr Razali Ismail), who played a key role in Aung San Suu Kyi's release in May 2002. We encouraged the Burmese Government to cooperate with the International Labour Organization to eradicate forced labour in Burma.

The department worked to consolidate constructive relations with Cambodia and achieved a number of positive outcomes through persistent advocacy of Australian interests. Through our post in Phnom Penh, we facilitated the visit of Cambodian Deputy Prime Minister, Mr Sar Kheng, to encourage further cooperation on people smuggling and other issues. We continued to urge the Cambodian Government to bring to justice those responsible for the death of David Wilson in 1994. Sam Bith was arrested in connection with this in May 2002. We encouraged the UN and Cambodia to resume negotiations on a UN-sponsored Khmer Rouge tribunal following the UN's withdrawal from discussions in February 2002.

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Table 6. Australia's regional trade with South and South-East Asia

	Exports			Imports
	2000-01 $m	2001-02 $m	Trend growth 1996-97 to 2001-02 %	2000-01 $m	2001-02 $m	Trend growth 1996-97 to 2001-02 %
ASEAN
Indonesia	3 111	3 193	0.8	3 315	4 007	12.3
Malaysia	2 500	2 526	3.1	4 177	3 860	17.0
Philippines	1 501	1 255	2.8	512	624	14.3
Singapore	6 009	4 936	11.0	3 899	3 975	11.0
Thailand	2 222	2 305	9.6	2 780	2 886	20.5
Vietnam	499	497	17.6	2 432	1 855	39.9
Other ASEAN	88	118	2.2	374	430	132.7
Total ASEAN	15 929	14 830	6.3	17 489	17 636	17.1
India	2 086	2 522	8.4	754	874	7.2
Other South Asia	1 142	1 161	8.0	349	326	5.8
Total South Asia	3 228	3 682	8.3	1 103	1 200	6.8
Total	19 158	18 512	6.6	18 591	18 836	16.3

Source: Compiled by DFAT from ABS data.

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ASEAN and regional issues

Complementing our work to strengthen bilateral relationships, the department, including our network of posts in South-East Asia, was active in cementing ties with ASEAN. This was in recognition of the importance of political links to underpin economic, trade and security relationships. We supported Mr Downer's participation in the ASEAN Regional Forum and the ASEAN Post Ministerial Conference in July 2001 in Hanoi. We raised awareness in ASEAN of the depth of Australia's engagement with the region by facilitating the visits to Australia of a group of senior editors from ASEAN countries, and of the ASEAN Secretary-General, Mr Rodolfo Severino.

In partnership with the Thai Ministry of Foreign Affairs, the department organised the third Coolum Forum, co-chaired by Mr Downer. The forum brought together influential individuals from East Asia to discuss economic, political and strategic prospects for Asia after the 11 September 2001 terrorist attacks. The department coordinated Australia's hosting in May 2002 of a Forum for East Asia-Latin America Cooperation working group on education, science and technology in Canberra (see sub-output 1.1.3 at page 54 for further detail).

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Figure 9. Australia's merchandise trade with ASEAN

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South Asia

The department's efforts to strengthen the framework of bilateral relations with India advanced Australia's interests with a country of strategic significance and growing economic weight. The department supported Mr Downer's visit to India in April 2002 for a successful second round of the Foreign Ministers' Framework Dialogue. We inaugurated a bilateral strategic dialogue in August 2001 involving senior officials and military personnel and secured India's agreement to a new bilateral defence dialogue. Senior officials' talks in June 2002 produced an increasingly useful exchange on bilateral, regional and international issues.

The department worked to encourage economic reform and a trade policy environment in India conducive to the expansion of the commercial relationship. Merchandise exports increased by 21 per cent in 2001-02 to $2.5 billion, making India Australia's thirteenth largest merchandise export market. We identified opportunities and strategies to boost bilateral trade and investment, including through a report titled India: New Economy, Old Economy by our Economic Analytical Unit. Mr Downer launched the report in December 2001. This report received wide and generally positive media coverage, despite some critical responses to minor aspects of the analysis.

The heightening of tension between India and Pakistan was of great concern to Australia and the international community. The department geared its consular services to safeguard the interests of Australians. We also supported Australia's role in the efforts of the international community to lower tensions, including reminding both countries of the weighty responsibility of their nuclear capability. There was a disappointing lack of progress in our efforts, along with those of the international community, to encourage India and Pakistan to sign the Nuclear Non-Proliferation Treaty and the Comprehensive Nuclear Test Ban Treaty.

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In response to its constructive role in the international campaign against terrorism, we facilitated the normalisation of Australia's relations with Pakistan . Defence ties and non-humanitarian aid, suspended after Pakistan's 1998 nuclear tests, were restored.

The department continued to promote Australia's commercial interests in Sri Lanka . Australia and Sri Lanka concluded an Investment Promotion and Protection Agreement in June 2002.

We monitored closely the security situation in Nepal with the aim of protecting Australians and our aid interests. Our mission in Dhaka was active in supporting the expansion of trade and investment relations with Bangladesh .

Following the removal of the Taliban, the department facilitated the re-establishment of Australia's diplomatic relations with Afghanistan . As well as Australia's participation in the US-led military intervention, Australia's $41.3 million aid pledge to Afghanistan was our second largest to an international humanitarian relief effort (see sub-output 1.1.8 at page 90 and sub-output 1.1.7 at page 82 for further detail on Australia's participation in military operations in Afghanistan).

Reporting against quality and quantity indicators and administered items begins on page 96.

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