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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

1.1.1 North Asia

On this page: Overview :: Japan :: China :: Republic of Korea (ROK) :: Democratic People's Republic of Korea (DPRK) :: Economic relationships in North Asia


The department worked to strengthen cooperation and dialogue with North Asian countries in support of Australia's international economic and security interests.

We continued to strengthen Australia's bilateral relationship with Japan in 2002–03. We intensified dialogue on security and increased cooperation on combating terrorism, contributing to Australia's goal of developing a more effective regional approach on terrorism. In reaching agreement on a trade and economic framework, we underpinned the future development of our economic relationship with Japan.

The thirtieth anniversary in 2002 of diplomatic relations with China was marked by a highly successful and busy exchange of visits and other activities that bolstered already robust economic and political ties. Australia embarked on a strategic partnership in energy with China, which announced in August 2002 that a $25 billion liquefied natural gas (LNG) contract had been won by an Australian consortium. We also made solid progress towards a trade and economic framework agreement with China. The department promoted Australia's political and strategic interests as well as its human rights goals through high-level bilateral dialogue with China.

The department maintained its focus on strengthening Australia's political, economic and cultural relations with the Republic of Korea (ROK). We were heavily engaged in bilateral and multilateral efforts to resolve tensions on the Korean Peninsula, especially in support of Australia's objective of ensuring the peninsula is free of nuclear weapons. We used our bilateral links, including leading a senior officials' visit to Pyongyang, and participation in regional and international organisations to help apply concerted pressure on the Democratic People's Republic of Korea (DPRK) to abandon its nuclear weapons ambitions. This difficult issue remained unresolved at year-end.


The department achieved strong results in broadening and strengthening the bilateral relationship with Japan in security and defence cooperation, trade and economic links, and people-to-people contact, contributing to Australia's security and prosperity.

The relationship continued to be underpinned by high-level contact and exchange, including a visit to Australia in December 2002 by the Crown Prince and Princess of Japan. Mr Downer visited Japan twice in 2002–03, meeting Prime Minister Junichiro Koizumi and other senior leaders on both occasions. Mr Vaile attended an informal meeting of World Trade Organization (WTO) Trade Ministers in Tokyo in February 2003 and met his counterparts to promote our market access objectives. The department supported visits to Australia by Prime Minister Koizumi's Foreign Policy Adviser, Yukio Okamoto, and Member of the House of Councillors, Keizo Takemi.

In response to an increasingly challenging regional security environment, the department continued to expand dialogue and cooperation with Japan on security and defence, which underlined the strong shared security interests between the two countries. High-level security dialogue was enhanced significantly with the institution of the Trilateral Security Dialogue between Australia, Japan and the United States. This contributed to a closely coordinated approach to regional security matters of mutual concern, such as the DPRK. We also encouraged Japan's diplomatic support for coalition military action in Iraq and its strong commitment to Iraq's rehabilitation. The department strengthened Australia–Japan cooperation to counter terrorist activity, developing a Joint Statement on Cooperation to Combat International Terrorism, issued by the Prime Minister and Prime Minister Koizumi during Mr Howard's visit to Japan in July 2003.

We negotiated a new Australia–Japan Trade and Economic Framework for signature by the Prime Minister and Prime Minister Koizumi. This framework was the outcome of the consultations launched by the two prime ministers in May 2002 to explore all options for deeper bilateral economic links. See sub-output 1.1.5 for further information.

The department worked with other agencies to protect and promote Australia's beef exports to Japan, one of our most valuable exports in this market. In the wake of an outbreak of bovine spongiform encephalopathy (BSE or 'mad cow disease') in Japan and a subsequent drop-off in Japanese beef consumption, our embassy in Tokyo successfully promoted the recovery of Australian exports. The department provided support for ministerial-level representations to the Japanese Government to persuade it not to proceed with its beef snapback tariff measure, under which beef tariffs can increase from 38.5 per cent to 50 per cent if beef imports exceed 17 per cent growth over the corresponding quarter of the previous year. In spite of these efforts, Japan maintained its disappointing stance and increased tariffs on 1 August 2003 for a period of eight months.

The second Australia–Japan Conference for a Creative Partnership was held from 7 to 8 November 2002 in Tokyo and featured a keynote speech by Mr Downer. The conference brought together eminent Australian and Japanese government, business and academic representatives to develop recommendations for further diversifying and reinvigorating the relationship. The department is working with other agencies and conference participants to implement the conference recommendations, which will strengthen dialogue and collaborative research in political, strategic and economic fields, and in education and health and technology for the aged.


The department focused on building more ambitious economic ties with China. Australia's LNG contract win and progress in the broader trade relationship with China were complemented by successful management of political issues.

Australia embarked on a strategic partnership in energy with China, which in August 2002 awarded a $25 billion LNG contract to North-West Shelf Australia LNG. The department's advocacy, including the efforts of our embassy in Beijing, played a significant role in this outcome. Our monitoring of developments in China's economy and politics and its implementation of WTO commitments helped us secure greater access to the Chinese market for Australian businesses in other sectors.

The department made progress towards the conclusion of a trade and economic framework agreement with China. Discussions at senior officials level in late 2002 launched work on a joint study analysing trends in bilateral trade and investment and identifying potential areas for future cooperation. In preparing this study we consulted closely with Australian businesses involved in China trade and investment. Our aim is an ambitious and forward-looking outcome that maximises the prospects for an expansion of trade and investment links, including those arising from China's WTO accession commitments and the recent positive developments in the trade relationship.

Our Regional Security Dialogue with China, held in August 2002 for the first time since 1999, was notable for the depth of exchanges on key international and regional issues of common concern, such as counter-terrorism.

We strengthened our contribution to improving human rights in China through the sixth round of the Human Rights Dialogue in August 2002. China's increasing responsiveness on individual cases of concern, as well as the release of a number of prisoners of conscience whose cases had been raised by Australia, are encouraging signs. We pressed for extension of the Human Rights Technical and Cooperation Program (HRTC) to Tibet and facilitated agreement for the HRTC planning mission to travel to Tibet.

A busy program of high-level visits marked the thirtieth anniversary of Australia–China diplomatic relations in 2002 and strengthened people-to-people links. Building on the success of the visit of the Prime Minister to China in May 2002, Mr Downer visited China in November 2002. Visitors from China included the then National People's Congress Chairman Li Peng. Dialogue between the Prime Minister and Li Peng highlighted the strength and potential of bilateral relations. The department also established its first diplomatic training exchange with China's Ministry of Foreign Affairs, under which staff study for a year in the other country.

In early 2003 the outbreak of the Severe Acute Respiratory Syndrome (SARS) virus had a significant impact on the department's ability to advance some of Australia's key interests in China, with the cancellation of a number of high-level visits to China that had been planned for the April–June period. Notwithstanding the impediments caused by SARS, we fostered contact with China's new leadership under President Hu Jintao and Premier Wen Jiabao, elected to their new positions in March 2003.

Republic of Korea (ROK)

The department further developed strong, practical and mutually beneficial links with the ROK. Our growing range of regular bilateral consultations enables Australia to influence a key regional partner and shape responses to regional and global challenges.

We hosted in Hobart on 16 to 18 July 2002 the Fourth Australia–Korea Forum involving government, business, media and academic experts. The forum's recommendations aim to strengthen cooperation in all aspects of the bilateral relationship. The Australia–Korea Broadband Summit, held on the Gold Coast on 9 May 2003, was an excellent example of the type of small-scale, focused, industry-driven event participants had envisaged arising from the forum's recommendations. See also the Australia–Korea Foundation, p165.

The department supported Mr Downer's visit to the ROK for President Roh Moo-hyun's inauguration on 25 February 2003, which provided a good opportunity to register with the new administration Australia's strong commitment to the bilateral relationship and to resolving tensions on the Korean Peninsula.

Australia continues to explore with the ROK options for strengthening our trade and economic links, notably through our annual bilateral meetings of trade ministers.

Democratic People's Republic of Korea (DPRK)

Photo - See caption below for description
First Assistant Secretary, North Asia Division, Murray McLean, led an official delegation to the Democratic People’s Republic of Korea in January 2003. Mr McLean (right) is pictured meeting the DPRK Foreign Minister, Paek Nam Sun (left).
Enlarge image :: Photo gallery

The department was active in support of attempts to resolve the nuclear crisis in the DPRK. The DPRK's admission in October 2002 that it had a uranium enrichment program, in breach of its international obligations, and its subsequent actions—including its expulsion of International Atomic Energy Agency (IAEA) inspectors, re-activation of its nuclear program and its announced withdrawal from the Nuclear Non-Proliferation Treaty—threatened international peace and stability, especially in the Asia-Pacific region.

In response to these serious developments, Mr Downer dispatched an official delegation to Pyongyang in January 2003, led by a senior departmental official. Taking advantage of the establishment of diplomatic relations two years earlier, Australia was the first country to convey its concerns directly. The delegation registered the deep concerns held by Australia and the international community about the DPRK's actions. In more than eleven hours of discussion with foreign ministry officials and Foreign Minister Paek Nam Sun, the delegation urged the DPRK to abandon its nuclear weapons ambitions in return for greater international support. The visit attracted strong support from Australia's allies and major partners.

We led inter-departmental consideration of practical measures for dealing with the threat posed by the DPRK's nuclear weapons program, including the potential proliferation of nuclear-related materials and technology, as well as suspected illegal activities to earn foreign exchange. By maintaining regular dialogue with the DPRK embassy in Canberra, we ensured our views on the DPRK's nuclear developments and on critical security and humanitarian issues of concern were clearly understood. The department worked closely with partners in the IAEA and the ASEAN Regional Forum (ARF) to ensure appropriately robust responses by the international community to DPRK provocations.

Following Mr Downer's announcement that bilateral relations with the DPRK would be on hold until it took steps to dismantle its nuclear weapons program, the department implemented the deferral of new government-funded economic and technical initiatives and plans to open an Australian embassy in Pyongyang. We continued to consider requests for food aid on a case-by-case basis in view of the humanitarian crisis facing the DPRK.

We cooperated with law-enforcement agencies to ensure the effective investigation of a DPRK vessel, the Pong Su, which was allegedly involved in trafficking illegal narcotics to Australia.

Table 5. Australia's trade in goods and services with North Asian economies
  Exports Imports
  2001 $m 2002 $m Trend growth
1997 to 2002
Trend growth
1997 to 2002
Japan 27 132 25 660 6.4 17 271 17 534 6.2
ROK 10 322 10 754 10.4 4 976 5 075 8.2
Taiwan 5 893 5 102 4.1 3 153 3 481 3.7
Hong Kong 5 591 4 954 2.5 3 364 3 161 8.1
China 8 456 9 300 19.1 10 980 13 727 21.1
Other 39 58 46.2 12 25 10.1
Total North Asia 57 432 55 829 8.1 39 753 43 004 9.9

Economic relationships in North Asia

In addition to our efforts to support Australia's beef exports (see page 29) and to negotiate the Trade and Economic Framework (see sub-output 1.1.5 for more information), the department worked closely with other Australian Government agencies in pursuing improved access for Australian exports to Japan. We encouraged Japan to recognise the fruit fly-free status of the Riverland area of South Australia, and organised a visit to the Riverland by the Japanese Agriculture Counsellor to see the region at first hand. We expect the Japanese Government to complete its full assessment of our submission on this issue later in 2003.

The department contributed to a partial lifting of a Japanese quarantine measure that delayed the customs clearance of Australian blueberries. This will ensure Australian product continues to reach Japanese consumers in a fresh state.

We secured Japanese acceptance of more generous weight allowances for Australian thoroughbred racehorses based on the International Federation of Horse Racing Authorities' Paris Accord. This will reduce the discriminatory treatment of Australian-bred thoroughbreds in Japan.

The department also represented the views of Australian business in a range of sectors, including medical devices, footwear and legal services, through a submission to the Japanese Government under its deregulation promotion program. Japan has not yet made a decision on these issues.

Figure 5. Australia's trade in goods and services with Japan

Figure 5. Australia's trade in goods and services with Japan

View text description of above chart

The department supported a number of commercial achievements in China in addition to the successful tender for the major LNG contract (see page 30), including:

Figure 6. Australia's trade in goods and services with China

Figure 6. Australia's trade in goods and services with China

View text description of above chart

We contributed to notable market access gains for Australia in the Republic of Korea (ROK). Live cattle shipments to the ROK were successfully resumed after a long hiatus. We coordinated a media campaign in the ROK to defuse criticism of Australian cattle imports while working to alleviate ROK concerns about quarantine and the economic and social impact of the trade.

The department's advocacy of Australia as a reliable and secure supplier of LNG to meet the ROK's energy needs was instrumental in securing the Korea Gas Corporation's purchase of $1 billion of LNG from North West Shelf producer, Australian LNG Ltd. The contract to supply is for a seven-year period, beginning in late 2003.

The department provided financial and organisational support for an Australia–Korea Broadband Summit on the Gold Coast. The summit brought together strategic private sector and government players from the Australian and ROK information and communications technology sectors to explore complementary strengths in telecommunications, broadband and software services. The ROK Communications Minister participated in the summit, the first ROK Cabinet minister to visit Australia since the inauguration of the new ROK administration in early 2003.

Figure 7. Australia's trade in goods and services with the Republic of Korea

Figure 7. Australia's trade in goods and services with the Republic of KoreaView text description of above chart

In support of Australia's substantial economic interests in Taiwan, the department identified and maximised opportunities to raise business sector awareness of opportunities resulting from Taiwan's entry to the WTO, particularly in rice and sugar, in legal and educational services, and in intellectual property (IP) protection. Our sustained representations to Taiwan authorities were successful in ensuring that Australian exports met administrative requirements resulting from Taiwan's WTO entry, notably on outstanding quarantine and agricultural issues. This resulted in expanded access for seafood and fresh produce exports.

The fifth annual bilateral economic consultations advanced Australian market access in Taiwan through high-level discussions between key trade and economic officials on investment, services and goods trade issues. They also provided the opportunity to agree on cooperative objectives in the WTO and in the Asia-Pacific Economic Cooperation (APEC) forum, as well as demonstrating the potential for using these frameworks to advance Australia's bilateral market access objectives. Our representations seeking stronger IP legislation were reflected in amendments to Taiwan's legislation, providing improved avenues for protection against IP piracy.

Other outcomes to which we contributed during the year included:

Figure 8. Australia's trade in goods and services with Taiwan

Figure 8. Australia's trade in goods and services with Taiwan

View text description of above chart

In 2002–03, the adverse effects of the spread of the SARS virus had a major impact on Australia's trade with Hong Kong. Despite these difficulties, we contributed to some notable outcomes during the year. We supported the successful introduction of the Australian Broadcasting Corporation's Asia-Pacific overseas television network on cable television in Hong Kong, potentially a major market. We advanced cooperation with Hong Kong in the financial services sector, including a mutual recognition project between the Australian Securities and Investments Commission and the Hong Kong Securities and Futures Commission, which will help promote Australian managed funds in Hong Kong.


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Department of Foreign Affairs and Trade Annual Report 2002–2003
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