Annual Report 2003-2004

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Your location: Performance > Outcome 1 > Output 1.1 > 1.1.2 South and South-East Asia

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

On this page: Overview :: Partnerships with South-East Asia :: ASEAN and regional issues :: South Asia


The department continued to promote Australia's economic, political and strategic interests against the background of an improved economic outlook in South and South-East Asia.

Prospects for Australian exports to the region brightened after a year in which they were affected by the drought, a rising Australian dollar, lacklustre economic conditions in the region, and the impact of severe acute respiratory syndrome (SARS). Thailand, Malaysia and India proved to be among the best economic performers in the region. Strong growth in China drove much of the region's economic activity and trade.

However, good economic performances were not uniform throughout the region. Concerns about security and the slow pace of reform in some countries, particularly Indonesia and the Philippines, undermined international investor and business confidence. In pursuing trade outcomes in a challenging regional environment, the department used its high-level government and business networks in South and South-East Asia to improve market access for Australian exporters. The department led successful negotiations for a free trade agreement with Thailand—a major step forward in Australia's engagement in the region.

An unusually large number of parliamentary and presidential elections were scheduled throughout South and South-East Asia during the year. Elections in Indonesia, India, the Philippines, Malaysia and Sri Lanka underlined the region's commitment to democratic processes. Despite the political uncertainties, the department continued to engage national governments in the region and advocate Australia's national interests. We successfully negotiated two new bilateral agreements on counter-terrorism with India and East Timor, extended the existing counter-terrorism agreement with Indonesia.

The department, together with Austrade, closely monitored the outbreak of avian influenza in several countries in South and South-East Asia early in 2004. Aware that the spread of the virus could upset regional trade and the free movement of business people, we prepared in-depth assessments of its potential impact on Australian exports to the region, particularly exports of poultry products. In the event, the outbreak was contained and did not have lasting consequences for regional trade and investment flows.

Regional cooperation continued to grow in the fight against transnational crime, especially terrorism, drug trafficking, people smuggling and money laundering.

Partnerships with South-East Asia

Photo - See caption below for description
Minister for Foreign Affairs, Mr Alexander Downer, met Indonesian President Megawati Soekarnoputri, accompanied by Foreign Minister Hasan Wirajuda, at the Presidential Palace in Jakarta in December 2003. Photo: SETPRES RI.
Enlarge image :: Photo gallery


The department contributed to improving Australia's broad-ranging relationship with Indonesia in areas of importance to Australian national security.

Particular areas where we made a major contribution with other government agencies included cooperation on counter-terrorism and combating people smuggling. We took a leadership and management role in the commemoration of the first anniversary of the Bali bombings (see Outcome 2 for more information).

The frequency of high-level government exchanges between our two countries underscored the significance of Australia's bilateral relationship with Indonesia. The department contributed to the strengthening of the relationship through its management of high-level visits, including a visit by the Prime Minister, four visits by Mr Downer and a visit by the Attorney-General, Mr Ruddock. We also facilitated parliamentary visits to Indonesia in December 2003 and February 2004.

The department contributed to Australia's efforts to support the conduct of peaceful parliamentary elections in Indonesia. We facilitated a visit by four Australian politicians to act as election observers in April 2004. We played a central coordinating role in visits to Australia by senior Indonesian Government officials, including the then Coordinating Minister for Political and Security Affairs, Susilo Bambang Yudhoyono, Minister for Foreign Affairs, Dr Hassan Wirajuda and Minister for Trade, Rini Soewandi. The visits of Mr Yudhoyono and Mr Wirajuda provided opportunities to build further productive bilateral links on counter-terrorism activities, including in preparation for the February 2004 Bali Regional Ministerial Meeting on Counter-terrorism. Mr Vaile and Mrs Soewandi agreed on a number of initiatives to increase bilateral trade and investment, including the holding of an Australia–Indonesia Automotive Summit and the establishment of an Australia–Indonesia Investment Group.

Counter-terrorism cooperation has a central place in the bilateral relationship. The department worked closely with Indonesia to:

We also advocated Australia's vital counter-terrorism interests in Indonesia. We helped facilitate the implementation of the $10 million package of counter-terrorism assistance to Indonesia announced by the Prime Minister in 2002, while encouraging other donors to play a constructive and timely role in supporting Indonesia's counter-terrorism efforts.

Engaging mainstream Islam

The department is playing a key role in deepening the Government's engagement with mainstream Islamic organisations in Indonesia to give us a better understanding of mainstream Islam in Indonesia, and give those organisations a better understanding of Australia. Mainstream Islamic organisations play an important role promoting pluralism in Indonesia.

The department advanced Australia's trade and investment interests in Indonesia by advocating improved market access for Australian exports, including wheat flour and live cattle. The Indonesian Government's decision to validate mining companies' contractual rights under forestry laws followed representations by the Australian embassy in Jakarta on behalf of Australian investors in the Indonesian mining sector.

We also contributed to building stronger links between our automotive sectors through our management of an Indonesian automotive taxation mission to Australia and the inaugural Australia–Indonesia Automotive Summit in Melbourne in March 2004.


The department made a substantial contribution to Australia's economic integration with Thailand—a key regional partner, the second largest ASEAN economy and one of the fastest growing economies in Asia.

We steered negotiations with Thailand on a comprehensive Thailand–Australia Free Trade Agreement (TAFTA) to a successful conclusion. TAFTA is a landmark in the evolution of the bilateral economic relationship. Once the Agreement comes into force, scheduled for January 2005, it will provide real benefits for Australian exporters, investors and service providers through improved access to the sophisticated and rapidly growing Thai market. TAFTA will be the first comprehensive free trade agreement concluded by Thailand (see sub-output 1.1.5 for more information).

Complementing the bilateral economic achievement enshrined in TAFTA, the department successfully negotiated with Thailand an umbrella Agreement on Bilateral Cooperation. This provides a comprehensive framework for future joint efforts between our two countries in many areas: security and law enforcement; environment and heritage; science and technology, information technology and telecommunications; civil aviation; public administration and public sector reform; energy; immigration; education, culture, social development, tourism; and natural resource management in agriculture. The Agreement was signed in July 2004. It is a treaty-level instrument, underlining the depth and maturity of Australia's relationship with Thailand.


Cooperative relations between Australia and Malaysia are already strong in a broad range of areas, but the department reviewed ways of strengthening them following the change of leadership in Malaysia on 31 October 2003 and the elections in March 2004.

The Secretary visited Malaysia in early March 2004 and held useful discussions with his counterparts in the Malaysian Ministry of Foreign Affairs and Ministry of International Trade and Industry. This visit paved the way for the successful visit by Mr Downer in June 2004, when agreement was reached on, among other things, an annual exchange of visits by the Australian and Malaysian foreign ministers and the inauguration of a senior officials-level security dialogue.


Australia and Singapore continued to cooperate at high levels, based on shared interests on a wide range of regional and international issues.

The closeness of the relationship was underlined at the Singapore–Australia Joint Ministerial Committee meeting in Singapore in July 2003, attended by Mr Downer, the Minister for Defence, Senator Hill, and the Minister for Small Business and Tourism, Mr Hockey. This meeting focused on consolidating our already-strong cooperation with Singapore on counter-terrorism and identified ways we could enhance cooperation in tourism. One outcome was agreement to establish a Joint Tourism Council.

The department played a major role in arranging a successful visit to Singapore by the Governor-General, Major-General Michael Jeffery, his first official overseas bilateral visit.

The Singapore–Australia Free Trade Agreement (SAFTA) entered into force in July 2003. The department ran a promotional campaign with Austrade and published a business guide to highlight the opportunities SAFTA offers Australian business. SAFTA is to be reviewed within one year of its entry into force, so we consulted business and federal and state government agencies on issues that might be raised during the first SAFTA review in July 2004. The consultations highlighted a number of areas of interest which were included in the review process.


The department provided considerable support to the July 2003 visit by the Prime Minister to the Philippines. The department worked closely with a number of government agencies, including AusAID, the Australian Federal Police, the Department of Immigration and Multicultural and Indigenous Affairs and the Department of Transport and Regional Services, to give effect to a $5 million Counter-Terrorism Assistance Package announced during the Prime Minister's visit.

We managed the April 2004 visit by the Philippines Foreign Secretary, Mrs Delia Albert. This provided a good opportunity to review bilateral counter-terrorism cooperation and exchange views on other international issues of mutual interest.

The department worked to resolve a number of difficult bilateral trade issues with the Philippines, including by coordinating a response by industry and government agencies following a decision by the Philippines Supreme Court that directly affected Australian mining interests. We helped Biosecurity Australia handle the public release of a revised draft import risk assessment and subsequent addendum about measures for the importation of Philippines bananas. In July 2003, the Philippines requested a dispute-settlement panel in its World Trade Organization (WTO) dispute about Australia's regime for the importation of fresh fruit and vegetables (see sub-output 1.1.5 for more information).


The department worked closely with the Department of Communications, Information Technology and the Arts to ensure ministerial participation by Brunei in the opening of the Brunei sunken treasures exhibition in Sydney in December 2003. The staging of the exhibition during 2004 in Sydney, Canberra and Fremantle coincided with the twentieth anniversary of diplomatic relations between Australia and Brunei.

We coordinated separate visits by the Brunei Deputy Minister and Permanent Secretary of Education, aimed at enhancing existing strong education links, and by a Brunei delegation to look at Australian best practice in public sector reform.


The department successfully pursued Australian economic interests in Vietnam. In 2003, BlueScope Steel's new $160 million steel mill became one of the largest investments by an Australian company in Vietnam. The Australian embassy's representations to the Vietnamese Government helped secure the investment.

Our trade advocacy scored two significant wins: Vietnam agreed to put a customs value on all goods from Australia onto a most-favoured nation (MFN) basis, and to apply import duties on Australian wines on an MFN basis, resulting in a significant reduction in tariffs on Australian wine exports to Vietnam. The decision by Vietnam's Trade Ministry followed sustained efforts by the department to encourage Vietnam to treat Australian wine imports the same as wine from the European Union. Prospects for sales of Australian wine to Vietnam will significantly improve as a result, especially as the Vietnamese economy continues to grow in size and sophistication. As part of negotiations on Vietnam's accession to the WTO, we sought improved market access to Vietnam for Australian exporters.

TABLE 6. Australia's trade in goods and services with South and South-East Asia
  Export Export   Import Import  
Goods(a) and Services CY2002
Indonesia 4 047 3 734 6.4% 4 840 4 547 5.4%
Malaysia 3 185 2 991 4.3% 4 675 4 982 6.6%
Philippines 1 291 1 088 -3.2% 959 983 12.4%
Singapore 7 286 5 595 5.4% 6 941 6 820 8.7%
Thailand 3 007 2 712 12.6% 3 979 4 352 13.7%
Vietnam 687 621 11.6% 2 623 2 628 25.0%
Other ASEAN 127 113 4.4% 643 636 78.8%
Total Asean 19 636 16 851 5.7% 24 664 24 952 10.0%
India 2 877 3 831 12.0% 1 157 1 205 11.6%
Other South Asia 1 253 940 2.1% 538 648 -3.2%
Total South Asia 4 129 4 771 9.1% 1 695 1 853 11.7%
Total 23 765 21 622 6.4% 26 359 26 805 10.1%

(a) Goods data is on a recorded trade basis.
Source: DFAT Stars database and ABS International trade in services by partner country 2003.

East Timor

The department played a key role in garnering international support for an extension of the United Nations (UN) Mission of Support in East Timor through to May 2005. This was an important outcome as it will help consolidate the significant gains East Timor has made during its first two years of independence. Through Australia's advocacy, the UN mission will continue to provide vital emergency support to East Timor's emerging security institutions.

The department supported AusAID and Australian Federal Police efforts to obtain East Timorese Government approval for a major bilateral policing project. The project will upgrade training and management capacity-building in East Timor's police force, which is a basic requirement for the long-term security of the country.

With the Attorney-General's Department, we led the Government's negotiating team in the first round of permanent maritime boundary negotiations with East Timor in April 2004, against a backdrop of high-level public interest.

In August 2003, the department organised the second Australia–Indonesia–East Timor Trilateral Foreign Ministers Meeting in Adelaide. An important outcome was the signing of a bilateral memorandum of understanding with East Timor on counter-terrorism.

We facilitated the visit to Australia by East Timor's Foreign Minister, Dr Jose Ramos-Horta, in December 2003 for the opening of the interim East Timorese Embassy in Canberra. The event marked a significant milestone in the diplomatic relations between our two countries.


The department continued to work towards improving conditions for a return to democracy in Burma. In December 2003, we supported participation by Mrs Gallus in the 'Bangkok process' meeting at which the Burmese Foreign Minister and representatives of 12 countries discussed the Burmese 'roadmap for democracy'.

Unfortunately, these and other efforts by Australia and the international community failed to produce necessary change in the situation in Burma. Burma continued to fall short of the commitments it made in the roadmap. The department conveyed to the Burmese authorities on a number of occasions Australia's concern at the continued detention of the leader of the National League for Democracy, Aung San Suu Kyi, and at Burma's failure to engage in a genuine process of political reform.


Australia's relations with Cambodia continued to expand with both countries working together to combat people trafficking, child sex tourism, narcotics and terrorism. Having negotiated market access commitments by Cambodia, we supported Cambodia's successful bid for membership of the WTO. We provided logistical support for a visit to Cambodia by a group of Australian Parliamentary observers to general elections in July 2003.

ASEAN and regional issues

The department organised a series of events to mark the thirtieth anniversary of Australia's dialogue relationship with ASEAN. This included a visit to Australia in April 2004 by the ASEAN Secretary-General, Ong Keng Yong, who met the Prime Minister, Mr Downer, business people, research institutes and officials.

The announcement in April 2004 that ASEAN Economic Ministers supported a free trade agreement between ASEAN, Australia and New Zealand highlighted the department's work in strengthening relations with the region. The Economic Ministers' recommendation that a summit, involving ASEAN, Australia and New Zealand at head-of-government level, be held in late 2004, added momentum to the development of links (see sub-output 1.1.5 for more information).

The department's efforts to combat people smuggling and trafficking continued to bear fruit through the active participation by countries in South-East Asia in the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime. Co-chaired by Australia and Indonesia, a program of practical workshops and activities resulted in improved cooperation on these issues among operational agencies in the region (see sub-output 1.1.7 for more information).

In November 2003, we arranged the third Coolum Forum, co-chaired by Mr Downer and his Thai counterpart, Dr Surakiart. The forum brought together around 25 distinguished individuals from government, business and academia in East Asia and Australia. A free-flowing exchange of ideas focused on transnational threats and opportunities, both for individual countries and for the region.

FIGURE 9. Australia's trade in goods(a) and services with ASEAN (TEXT DESCRIPTION)

FIGURE 9. Australia's trade in goods(a) and services with ASEAN

(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database and International trade in services by partner country 2003.

South Asia

The department maintained the strong growth in Australia's relationship with India.

We supported a further round of the Foreign Ministers' Framework Dialogue in August 2003 between Mr Downer and his then Indian counterpart, Mr Yashwant Sinha. The ministers signed a memorandum of understanding on cooperation in combating international terrorism. This and other areas of growing strategic convergence between Australia and India were topics in a further round of bilateral strategic dialogue and senior officials' talks in March 2004.

The department initiated an intersessional meeting of the Australia-India Joint Ministerial Commission in September 2003 to maintain momentum in Australia's commercial partnership with India. We also lobbied for improved access to the Indian market for a range of Australian exports. Despite our efforts, the market remains essentially closed to Australian meat products.

We supported Australian commercial interests in Pakistan, in particular following the rejection in March 2004 of shipments of Australian wheat on unscientific grounds, as later confirmed by international testing.

We promoted Australia's commercial interests in Sri Lanka and Bangladesh, helping Australian companies win major contracts for underground cables and solar energy. We lobbied successfully against tariff barriers and other measures penalising Australian exports of bulk milk powder, meat and bone meal.

The department supported Mr Downer's participation in the Conference on Afghanistan and the International Community, held in Berlin from 31 March to 1 April 2004. At the conference, Mr Downer announced additional aid funding for Afghanistan's reconstruction.

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Department of Foreign Affairs and Trade Annual Report 2003–2004
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