to inform and advise the Government on the advancement of Australia’s political, economic and security interests in North Asia;
to enhance trade and investment opportunities through commercial diplomacy, bilateral government- industry forums, and the provision of information and in-country assistance to Australian companies;
to maintain and expand high-level consultations, exchanges and mechanisms for dialogue to promote Australia’s interests in the security and economic development of the region;
to encourage wider adherence to international human rights standards and democratic principles; and
to project an accurate, contemporary image of Australia in North Asia and inform debate within Australia in support of Australia’s interests there, particularly closer economic integration.
North Asian countries continued to play a very important part in Australia’s relations with Asia in 1993- 94. Their markets accounted for almost 45% of Australia’s total merchandise exports. Prospects for Australia’s trade and investment in the region were very good as strong growth continued in most North Asian economies during the financial year.
The resources dedicated to sub-program 1.1 were the North Asia Division (North Asia Branch, East Asia Branch, North Asia Projects Section and the East Asia Analytical Unit) and a significant proportion of the work of Australia’s overseas missions in North Asia. The reporting period covered the first full year of operations of North Asia Division following the separation into two of the former Asia Division.
North Asia Division developed and administered two programs for the Department over the 1993-94 financial year, both components of the ‘Australia and Asia: Economies Growing Together’ package of initiatives. The Australia and Asia Institutional Linkages (AAIL) grants program provides seed funding to Australian institutes to establish, consolidate or develop linkages with their regional counterparts. This interaction contributes to the exchange of information between the Australian government and Australian institutes, facilitating a ‘second track’ dialogue on regional economic, political and strategic issues. A total of $480 000 was disbursed as one-off grants to 20 projects. The projects overall provide a broad coverage of the region both geographically, and with regard to topical policy issues. The AAIL program is allocated funding of $500 000 per year, over the period 1993-94 to 1996-97.
The second program, with a lower level of funding-the Asian Entrepreneurs Scheme-is designed to promote Australian exports to and business with Asia by drawing on the language, marketing and cultural expertise of Australians of Asian background. A series of consultative fora were conducted between the Department, Austrade and the Office of Multicultural Affairs on one side and Australian business people of Asian background and Asian Australian business and trade organisations on the other. Meetings were held in Melbourne, Sydney, Brisbane and Perth to discuss two principal themes: how Australian exporters could best utilise the skills and expertise of Australia’s multicultural population and the barriers faced by Australians of Asian background in their efforts to export. Further development of the scheme is being undertaken by the Office of Multicultural Affairs.
Following the creation of two separate divisions to cover activities in Asia, North Asia Division continued to cooperate closely with South and South East Asia Division in the handling of Asia-wide issues, including the two programs mentioned above. Officers of North Asia Division have been frequent contributors to the Department’s newsletter on regional issues, Asialine, published by South and South East Asia Division.
Ministerial and client (including the business sector) satisfaction with timely, appropriate responses to developments and opportunities in North Asia-coinciding with steady growth in Australian exports to and investment in the region; and
Indications through high-level, official and institutional contacts, and through media coverage of enhanced understanding and acceptance of Australian policies.
Japan
Australia’s substantial and very good relationship with Japan was fully sustained during a period of political and economic change in that country. In addition to the Australia-Japan Ministerial Committee held in Tokyo in November 1993, Australia and Japan held a host of official consultations covering specialised fields. Celebrate Australia (see sub-program 1.9), a major promotion organised by the Department in Japan in November 1993, expanded the perception of Australia in Japan and enhanced commercial and cultural links between the two nations.
Australia continues to enjoy a trade surplus with Japan. Exports to Japan in financial year 1993-94 grew by 5.6% to $15.6 billion (24.8% of total exports). Japan remained Australia’s second largest source of imports (19%), the volume growing 18.4% to $11.9 billion. Notwithstanding a general trend downwards in Japan’s foreign direct investment (JFDI), Australia remains the third largest recipient of JFDI and Japan is Australia’s third largest source of direct investment.
The conclusion of the Uruguay Round of the GATT negotiations provided the basis for the strengthening of these economic ties. Key features of the two economic reform packages, announced by the Japanese Government in February and March, dealt with macro-economic stimulatory measures, tax reform, public works, opening up the government procurement process to international competition, substantial deregulation, promotion of competition policy, and improved foreign access to the Japanese market for insurance, automobiles and auto parts. Australia has welcomed these reforms as well-intentioned and sees opportunities for Australian companies if the reforms are implemented effectively. Australia welcomed the partial opening of the Japanese rice market and looks forward to further liberalisation. Under the Uruguay Round commitment, in 1994 Australia will export more than 180 000 tons to Japan as a result of a shortfall in Japan’s 1993 rice harvest. Agricultural access issues the Department is continuing to raise with Japan include dairy and horticultural products.
The Uruguay Round outcomes and further unilateral packages announced by Japan presented the prospect of a more open Japanese market in the future. The successful conclusion of the General Agreement on Trade in Services (GATS) negotiations is expected to lead to some openings in the Japanese market for financial services, and value-added telecommunications. Liberalisation was also achieved in Japan’s legal services as a result of the round. Tourism and education are significant areas of Australian trade in services with Japan. Tourist numbers continued to grow in 1993 to total 670 000, albeit at a slower rate of 6.6% due to the recession in Japan. Students from Japan accounted for about 10% of all overseas students in Australia. Further opportunities will be available to Australian companies in 1994 through the Japanese Government’s establishment of a free access zone in Osaka to assist new companies to enter the Japanese market. The new Kansai airport will add extensive new airline capacity and will boost Australia’s trade with the region.
Australia has continued to express concern that trade friction between Japan and other partners does not adversely affect third parties. This has become particularly pertinent following increased pressure upon Japan in its Economic Framework negotiations with the US. During bilateral talks with both parties we have sought and received assurances that any agreements between Japan and the US will remain consistent with an open, multilateral trading system. The Department is particularly concerned that any agreements reached in the automobile industry should be based on commercial criteria lest they result in discrimination against Australian companies. While sharing the US’s aims in its negotiations of ensuring an open and transparent Japanese market, Australia, both in bilateral discussions and publicly, has supported the Japanese Government’s opposition to any form of managed trade. Australia considers a constructive US-Japan economic relationship as important for the security and economic development of the Asia-Pacific region.
The Australian Government has encouraged Japan to take a more prominent role in relation to regional and international issues commensurate with its economic power. We welcomed Japan’s participation in the ASEAN Post Ministerial Conference, the ASEAN Regional Forum and its more active participation in UN peacekeeping activities and support Japan’s eventual permanent membership of the UN Security Council, provided satisfactory arrangements can be achieved. Bilaterally, Australia and Japan have been developing defence contacts resulting in the inclusion of regional and international security issues at bilateral discussions and increased contact between the defence forces of the two countries. This strengthening, although still low-level, defence relationship reflects the shared interests of the two countries in a secure and stable regional environment.
In providing a vehicle for a more detailed discussion of economic and political issues the 26th Australia- Japan Officials’ Talks and the Australia-Japan Informal Trade and Industry Talks, held in May-June 1994, confirmed the good relationship of the two countries and their agreement on a number of regional and international issues. The Australia-Japan Ministerial Committee, which meets approximate-ly every two years, provides a forum for review and further development of the bilateral relationship. The 12th ministerial committee meeting, held in November 1993, confirmed both nations’ commitment to the conclusion of the Uruguay Round, the strengthening of APEC, cooperation on international issues and initiatives to strengthen the bilateral relationship.
Visits at all levels have continued between Australia and Japan in 1993-94 illustrating the close relationship between the two countries. However, as a result of the political changes in Japan, visits in the last year by Japanese politicians have not been as frequent as those by Australian representatives to Japan. In December 1993 then Parliamentary Vice-Minister of International Trade and Industry, Mr Sadao Wada, visited Australia for the OECD Small Business Conference. In 1994 a young political leaders delegation visited Australia and had discussions with federal and state politicians, and a parliamentary delegation visited Australia’s Japanese community. The Department also facilitated visits of a number of Japanese business leaders to Australia.
Ministerial level visits to Japan included the Minister for
Foreign Affairs, Senator Evans, then Minister for Finance, Mr Ralph
Willis, then Minister for Trade, Senator Peter Cook, then Minister
for Primary Industry and Energy, Mr Simon Crean and the Assistant
Treasurer, Mr George Gear, all for the Australia-Japan Ministerial
Committee in November 1993. Senator Schacht visited Japan as Minister
for Science and Small Business in October 1993 and the Minister for
Development Cooperation and Pacific Island Affairs, Mr Gordon Bilney,
visited Japan in March 1994 for bilateral consultations. Numerous
visits to Japan were also undertaken by representatives of Australian
State governments and a range of private sector organisations.
Republic of Korea
President Kim Young-sam continued the process of economic and political reform in the Republic of Korea (ROK) over the last year. Korea’s Uruguay Round undertakings were the most visible example of the President’s commitment to reform and the globalisation and internationalisation of the Korean economy. The ROK’s undertakings on agriculture were not all that Australia had sought. However, decisions to liberalise its beef market by 2001 and to provide modest improvements in the access for rice were welcome. These decisions created some domestic political difficulties for the ROK Government.
The Korean economy grew 5.5% last year, helping bilateral trade reach another record level. Two-way trade for 1993-94 was valued at $6.58 billion, compared with $5.66 billion in 1992-93, confirming the ROK’s position as our fifth largest trading partner overall, just behind the United Kingdom, and our eighth largest import source. In 1993-94 the ROK was Australia’s third largest export market (accounting for 7.3% of exports) and the value of merchandise exports increased strongly during the year to $4.7 billion. Imports from Korea in 1993-94 increased to $1.9 billion, giving Australia a trade surplus of more than $2.5 billion. This, and Australian anti-dumping actions, continued to concern Korea while Australia continued to press for greater access for our agricultural products to the Korean market.
Australia’s largest exports to the ROK continued to be coal, non-monetary gold, iron ore and aluminium. Nevertheless the 26% growth in elaborately transformed manufactures and the first spot sale of an Australian liquefied natural gas cargo to Korea were indicative of the increased competitiveness of Australian products in non-traditional export areas. A concern was the decline in the value of Australia’s beef exports to the ROK. Despite the conclusion of a bilateral beef access agreement in July 1993, sales fell 14.7% in 1993-94 to $157 million. Continued difficulties with access for Australian grass-fed beef and increasing competition from other suppliers (the United States and New Zealand) were the main factors in this decline.
Mutual efforts to diversify further the economic relationship were reflected in the annual Ministerial Trade Talks, held in Seoul in September 1993, and the conclusion of an arrangement establishing the Korea-Australia Joint Economic Committee, agreed during the visit in June 1993 of Prime Minister Keating to Korea. The then Minister for Trade, Senator Peter Cook, led the Australian delegation to the Ministerial Trade Talks which resulted in a productive and positive exchange on trade issues and agreement to promote cooperation in high technology projects, and enabled useful exchanges on the final stages of the Uruguay Round negotiations. Senator Cook was accompanied on his visit by a small environmental technology business delegation.
The Joint Economic Committee had its first meeting in Seoul in May 1994. It widened substantive discussion on economic and trade links to include representatives from agencies and ministries from both sides not usually represented in officials’ talks. Australia pushed its concerns for better market access, Korea responded positively to our proposal to exchange ideas on agricultural restructuring, and both sides agreed to continue close collaboration on trade liberalisation in the APEC context, and joint cooperation on projects in South-East Asia.
Despite continuing strong growth in bilateral trade, two-way foreign direct investment has been relatively minor. Australian investment in Korea as at June 1992, the most recent official figures available, was only about $385 million, or 0.4% of total Australian foreign direct investment. ATEL - Telstra’s joint venture with Posdata, established in 1993 - will add another $25 million to these statistics. The level of Korean investment in Australia is similarly small at around $220 million, or less than 0.1% of the total stock of foreign investment in Australia, and is concentrated in the resources sector, especially in coal mining. Samsung announced in November 1993 that it would invest $180 million in a joint venture with Clutha Ltd to develop the Spring Vale colliery near Lithgow.
Cooperation on regional economic and security issues increased. The excellent rapport established between President Kim Young-sam and Prime Minister Keating during the latter’s visit in June 1993 developed further at the Seattle APEC Leaders’ Meeting. Foreign Minister Senator Evans and also met his Korean counterpart Han Sung-joo on several occasions. These contacts, together with the Korea- Australia Senior Officials’ Talks held in Canberra in May 1994 and other officials’ meetings, helped both countries develop policies on trade liberalisation and trade facilitation in APEC and on the development of the ASEAN Regional Forum.
The North Korean nuclear issue was a major subject for discussion between Ministers and officials throughout the year. Australia played a very active role, greatly appreciated by the ROK, in bilateral contacts and as Chair of the Board of Governors of the International Atomic Energy Agency, in encouraging the Democratic People’s Republic of Korea to abide by its international commitments and obligations, as a member of the Nuclear Non-Proliferation Treaty, and assure the international community as to the peaceful nature of its nuclear program.
Improved bilateral business links were a feature of the reporting year. The Department participated in the annual joint meeting of the Australia-Korea and Korea-Australia Business Councils in Perth in November 1993. The Chair of the Korea-Australia Business Council, Hyundai Corporation President Park Se-yong, then led the Korean delegation to the inaugural National Trade and Investment Outlook Conference in Melbourne.
Air links between Australia and Korea have grown strongly since the conclusion of the new Air Services Agreement with Korea in April 1993. In 1993, two-way air traffic between Australia and Korea grew by 65.9%, with a total of 152,951 travellers between Australia and Korea. 82.9% were Korean visitors to Australia. The dramatic growth in tourism (62 000 Koreans paid short term visits to Australia in 1993, an increase of 84% on 1992) owes much to the highly successful and high profile Australian exhibition at the ROK’s Taejon Expo ’93. Australia’s Minister for Tourism, Mr Michael Lee, opened the Australian Pavilion at the Expo, which attracted over 2.5 million visitors (double the initial estimate) over a three month period. Education also continued to make a significant contribution to the bilateral relationship with approximately 3600 full-fee Korean students in Australia in 1993.
The only Korean Minister to visit Australia during the period was the Minister of Culture and Sport Lee Min-Sup. The highlight of his visit in October 1993 was the signature of a memorandum of understanding on sports cooperation.
The reciprocal Australia-Korea and Korea-Australia Foundations (established under the respective foreign ministries) continued to make a major contribution to increasing understanding in each country of the other’s culture and society. The Australia-Korea Foundation (see sub-program 1.9) was allocated a budget of $750 000 to fund research and exchange programs with Korea.
Democratic People’s Republic of Korea (DPRK)
Limited official contact took place with DPRK diplomatic representatives during the period in Bangkok, Beijing, Jakarta, Vienna and New York, primarily to urge the DPRK to meet its international obligations as a member of the Nuclear Nonproliferation Treaty (NPT) and to resolve doubts about the purpose of its nuclear program by dialogue and negotiation.
Attempts to resolve the issue by negotiation almost failed, as the DPRK continued to restrict the activities of International Atomic Energy Agency (IAEA) inspectors, in contravention of its undertakings pursuant to its safeguards agreement with the agency. This came to a head in May when the DPRK commenced downloading its 5MW reactor without inspectors present, thus preventing verification of the history of the reactor and whether fuel had been extracted for reprocessing which would have yielded a small quantity of weapons-grade plutonium.
In response the IAEA Board of Governors, chaired by Australia, adopted a resolution calling again on the DPRK to meet all its obligations and terminating non-medical technical assistance. The DPRK then withdrew from the IAEA, although it permitted agency inspectors to remain in North Korea. The issue returned to the United Nations Security Council, provoking discussion of economic sanctions against the DPRK.
However a visit by former United States President Mr Jimmy Carter to Pyongyang from 15 to 18 June produced an undertaking by the DPRK to freeze its nuclear activities and enter a third round of high-level negotiations with the United States. It was also agreed that the DPRK and the ROK would hold a summit meeting-the first ever at head of government level. Those undertakings also resulted in a halt to consideration of sanctions in the Security Council, pending the outcome of the bilateral negotiations.
The issue was a major preoccupation for Australia throughout the year. The Prime Minister, Mr Keating, told Parliament on 3 February that it had the ‘highest security significance’ for Australia and the region. The Government followed developments particularly closely in May and June, as tension increased on the Korean peninsula over the issue. Senator Evans issued a statement on 16 June urging the DPRK to reconsider its withdrawal from the IAEA and return to the negotiating table. The Government supported the outcome of the Carter visit which helped to reduce tension on the peninsula and re-establish the basis for a resolution of the issue by negotiation.
Australia’s bilateral relations with the DPRK remain suspended (and have been so since 1975). Improved bilateral relations depend on the DPRK fulfilling all its NPT obligations, permitting comprehensive IAEA inspections of all its nuclear facilities and implementing its bilateral denuclearisation agreement with the ROK. Other conditions for normalisation of Australia’s relations with the DPRK include substantive improvement in ROK-DPRK relations and progress by the DPRK in settling its outstanding international debt, a proportion of which is owed to Australian banks.
China
Economic relations between Australia and China strengthened substantially over the past year, as both sides stepped up high-level political exchanges following the Prime Minister’s visit to China in June 1993, and as China’s economy grew at 13.4%-the fastest-growing major economy in the world. China moved up to become Australia’s sixth largest trading partner in 1993-94, with two-way trade expanding by more than 18% to $5.7 billion. Exports of $2.6 billion were 14% higher than the previous year, while imports from China rose 22% to $3.1 billion. The trend for the first half of 1994 was one of strong export growth-27% higher than the same period for 1992-94-and slower import growth (up 16%). A feature of particular note was that exports of complex manufactures (ETMs) increased by almost 50% in 1993-94, with strong growth likely to continue as the demand for sophisticated goods grows with China’s modernisation. Exports of primary commodities and industrial raw materials nonetheless still accounted for the major share of total exports to China.
Australian investment in China also grew strongly, including in a number of large-scale projects, involving firms producing both for export and the Chinese domestic market. Investment now ranges widely over manufacturing activities such as the automotive, processed foods, textiles, glassware, and communications industries. Australian firms are also beginning to move into the service industries in China, including banking, insurance and legal services, as the country gradually liberalises foreign access to these sectors. China, too, is expanding its investment in Australia. Apart from joint ventures, more than 100 corporations and organisations have opened representative or branch offices in Australia.
Senator Peter Cook, then Minister for Trade, led a large business delegation to the inaugural Australia- China Trade and Investment Outlook Conference in Beijing in September 1993. More than 100 senior Australian business people attended and conducted productive business negotiations with their counterparts from all parts of China. The forum concentrated on hitherto non-traditional areas of Australian trade with China, in complex manufactures and services.
In line with Australia’s strategic focus on economic opportunities in the provinces where the decision- making powers of local leaders are growing, Senator Cook led a smaller delegation of Australian business people to the fast-growing and dynamic cities of coastal and southern China after the forum. His visit to each centre involved business discussions with local counterparts. Ministerial endorsement of the process assisted in bringing about significant business outcomes, including a 119-member return delegation from China to Melbourne and Sydney in early June 1994.
In April 1994, Senator Evans visited China for formal talks in Beijing, followed by calls on top provincial government figures in Sichuan, Hubei, Guangxi and Guangdong. This was followed in late April by a state visit by the Governor-General Mr Hayden, who focused in particular on visits to provincial centres. The then Minister for Industry, Technology and Regional Development, Mr Griffiths, and Mr Lee, then Minister for Tourism and Minister for Resources, also separately visited both coastal and interior provinces, promoting Australian industry and technology.
Visits by senior Chinese leaders-the National People’s Congress First Vice-Chairman, Mr Tian Jiyun, in May, and State Councillor and Minister for the State Commission for Restructuring the Economic System, Mr Li Tieying, in June-reflected China’s interest in closer economic engagement with Australia.
Discussions with China’s Minister for Foreign Trade and Economic Cooperation, Madame Wu Yi, in October 1993 at the Seventh Joint Ministerial Economic Commission in Canberra, concentrated on finding ways to improve access for Australian goods and services in the Chinese market, including increasing cooperation on wool, iron and steel, shipping, and build-operate-transfer projects. Following the talks China agreed to lower tariffs on raw wool and wool tops, but negotiations on securing a much greater liberalisation of the trade regime for China’s wool imports have continued in the context of China’s GATT/WTO accession application. Australia also reaffirmed it wanted to see China subject to broad fair-trade disciplines through accession to the GATT/WTO. Following completion of the Uruguay Round, Australia focused more clearly on China’s application to join the General Agreement on Trade in Services (GATS) as part of its GATT/WTO accession. Formal requests were placed on China in the first bilateral services meeting, held in Beijing in June. China still remained some distance from full conformity, although extensive trade and economic reform has brought China’s trade regime closer to GATT/WTO principles. A further major outcome from the talks was Chinese agreement to negotiate a framework to maximise trade and investment opportunities over the next three years. A framework was subsequently agreed in talks between senior officials. It covers a variety of sectors, including expanded economic integration of both countries’ minerals, agricultural and raw materials processing sectors.
Consistent with Australia’s interests in the substantial economic growth occurring in China’s provinces, the Department assisted with visits by several senior provincial figures. The Governor of Guangdong Province, Mr Zhu Senlin, and senior Chinese business figures in manufacturing, building, finance and minerals industries, attended the first National Trade and Investment Forum in Melbourne in November. Governor Zhu also visited Perth, Canberra and Sydney. The First Vice-Mayor of Shanghai, Mr Xu Kuangdi, Mayor Yu Zhengsheng of Qingdao Municipality, and the Party Secretary of Shandong Province, Mr Jiang Chunyun, made separate visits. The year also saw official visits by the Governor of Gansu Province, Mr Tian Chengping, and the Governor of Yunnan Province, Mr He Zhiqiang. Other visitors focusing on deeper economic cooperation with Australia included the Minister for Geology and Mineral Resources, Mr Zhu Xun, the Minister for Coal, Mr Wang Senhao, and the Minister for Civil Affairs, Mr Duoji Cairang.
As countries in the same region, Australia and China have common security and strategic interests which form the central elements in regular dialogue at ministerial and official level. Particular issues of interest to both sides include disarmament, chemical and biological weapons controls, regional security, immigration, the development of APEC, and the developing role of international organisations. Australia continues to maintain a direct dialogue with China in a number of areas of international concern, including market reforms and political modernisation, nuclear weapons testing and proliferation.
Australia also maintained a dialogue with China on human rights, in the belief that constructive engagement on this issue is the most likely means of achieving lasting progress.
Mongolia
Mongolia’s continuing commitment to political and economic reform received strong support from Australia during the year, including through the state visit in April 1994 of the Governor-General and Mrs Hayden. The Governor-General addressed Mongolia’s Parliament, the Khural, where he stressed Australia’s support for Mongolia’s transition from a centrally planned communist state to an independent, market-based democracy. He also met Mongolia’s President Ochirbat, Prime Minister Jasrai and government ministers.
Australia provides a growing program of assistance to Mongolia. Initial funding of $500 000 in 1992-93 rose to $750 000 in 1993-94 and will reach $1 million in 1994-95. The program provides management assistance in the agricultural and mining sectors, human-resource development including English training and some humanitarian activities, mainly in health.
Hong Kong
With fewer than three years to go before it returns to China, Hong Kong faces major challenges in ensuring a smooth and successful transition. Australia has continued to support the implementation of the 1984 Sino-British Joint Declaration. That agreement, fully implemented, would enable Hong Kong to retain its present social and economic systems for 50 years after its return to Chinese sovereignty in 1997 under the ‘one country, two systems’ concept promised by China. Australia supported electoral reform proposals put forward by the Governor of Hong Kong, Mr Chris Patten, which were passed, unaltered, by Hong Kong’s Legislative Council in June 1994.
Australia’s strong links with Hong Kong were enhanced by a continuing flow of high level visits. In addition to visits by a number of federal ministers and state premiers, the Governor-General, Mr Hayden, the Minister for Foreign Affairs, Senator Evans and the former Minister for Trade, Senator Cook, made visits to the Territory. In February, Governor Patten made an official visit to Australia. The Secretary for the Hong Kong Civil Service, Mr Michael Sze, also visited Australia.
Major bilateral agreements concluded with Hong Kong during the past year include an investment promotion and protection agreement, an air services agreement and a mutual extradition treaty. Australia has continued to engage actively with Hong Kong in regional and multilateral forums, particularly in APEC and GATT. Australia was also a key player in Hong Kong’s gaining observer status in 1994 in the OECD’s Trade Committee and Working Party.
In 1993-94, total trade between Australia and Hong Kong was $3.586 billion, accounting for 2.1% of Australia’s total trade and making Hong Kong Australia’s tenth-ranked trading partner. In 1993-94 Australia’s exports to Hong Kong-predominantly non-monetary gold, coal and aluminium-totalled $2.784 billion or 4.3% of Australia’s total exports. Imports from Hong Kong in 1993-94 totalled $801 million and comprised 1.2% of Australia’s total imports. Approximately half of these imports was office machines and computers, electrical equipment and appliances and textile yarn and fabrics. In 1993-94 Australian exports to Hong Kong grew by 7.2% on the 1992-93 figure, while imports from Hong Kong grew 0.7% for the same period. Hong Kong continued as an important channel for the re-export of Australian products and services to China. More than 350 Australian companies were based in Hong Kong and more than 1000 Australian firms had representative offices there. Almost 25 000 Australian citizens were estimated to be living in Hong Kong.
At 30 June 1993, Australian investment in Hong Kong stood at $3.122 billion, about 4.4% of Australian investment overseas, while Hong Kong’s investment in Australia stood at $13.384 billion, a 25.48% increase on the previous year.
Macau
With visits by the Governor-General in April 1994 and the Finance Minister, Mr Willis, in October 1993, Australia underlined the importance it places on a smooth and stable transfer of administration from Portugal to China in 1999. China has promised Macau autonomy similar to that it has promised Hong Kong post-1997, which it will need to exercise vigorously if it is to play a growing entrepôt role in China’s economic modernisation.
While only a minor trading partner of Australia, Macau offers good prospects for expanded trade. In particular, its capital works program holds out opportunities for the export of construction materials and services. Macau’s new airport, scheduled for completion in 1995, offers the prospect of lifting substantially Australian exports over the next 18 months.
Taiwan
Trade growth with Taiwan has remained strong, with tourism particularly impressive. The Government has continued to work closely and creatively with business to pursue Australia’s expanding trade and commercial interests with Taiwan.
In 1993-94 two-way trade between Australia and Taiwan reached $5.1 billion, making Taiwan Australia’s seventh largest trading partner, and our fourth most important trading partner in Asia. Export growth to Taiwan slowed in 1993-94 to 2%, with total exports of $2.7 billion, but Taiwan remained our seventh largest export market, with marked increases in exports of elaborately transformed manufactures.
The Government has continued to pursue specific market access objectives bilaterally. Taiwan’s application to accede to the General Agreement on Tariffs and Trade (GATT) has, however, become the primary vehicle for opening the Taiwan market to Australian goods and services. Australia has assumed a leading role in using the unique opportunity offered by the GATT/WTO accession process to press Taiwan to adhere fully to GATT rules and to implement a wide-ranging liberalisation of its trade regime, particularly in its highly protected agricultural sector. Substantial new opportunities for Australian exports would flow from successful accession negotiations. The Government has worked closely with the Australian business community and industry bodies to identify Australia’s key commercial interests and priorities in this process.
While traditional commodity exports continue to be the mainstay of trade with Taiwan, Australia is paying particular attention to building its profile in the rapidly expanding markets for high quality manufactures. The Australian Commerce and Industry Office (ACIO) in Taipei, with the support of the Government, mounted a major promotional program in November and December of 1993, combining carefully targeted trade promotions with cultural and other events to significantly increase awareness of Australia in Taiwan, both as a source of imports and more generally. The then Minister for Trade, Senator Peter Cook, lent his support to these efforts during an unofficial visit to Taiwan in November 1993. In October 1993 the Government also launched the Pure Australian Food Program in Taiwan, a pilot project promoting the quality and environmental purity of Australian food products, which will be replicated in other similarly dynamic Asian markets.
Continued rapid growth in Taiwan tourist visitors to Australia was assured through agreement reached in February to double during 1994 the capacity of air services between Australia and Taiwan. The Minister for Tourism, Mr Michael Lee, visited Taiwan unofficially in June 1994 to open a new Australian Tourist Office in Taipei. Taiwan tourists numbered more than 100 000 in 1993-94. Taiwan is expected to become Australia’s second-largest source of tourists by 2000.
In order to facilitate these commercial efforts, the Government has encouraged the conclusion of trade- supporting memoranda of understanding (MOUs) with Taiwan. MOUs have already been signed on investment promotion and on protection of industrial property, and MOUs on copyright protection and on duty-free temporary importation of goods (ATA Carnet-covering, for example, trade samples) are close to finalisation. Work is also progressing on negotiating a bilateral arrangement on avoiding double taxation.
The East Asia Analytical Unit in 1993-94 worked strongly towards its goals and objectives of enhancing Australia’s analytical and research capacity in relation to East Asia and ensuring that information produced by such analyses is effectively delivered to government and private sector decision makers. This was achieved through the publication of four major reports, the launch of a new working paper series, and a program of briefings to business, government and academia. Despite the difficulties of preparing reports for mixed audiences, the unit remains convinced that it is possible to do this without quality and relevance suffering.
The unit spent much of the later part of 1993 making presentations on reports issued in 1992, and planning and setting up a number of new studies, six of which were released in the first half of 1994. The presentations covered a diverse range of interests, from business seeking more information on trade and economic opportunities in Asia to academic institutions which have placed the unit’s publications on their reading lists. As well as presentations to the public, the unit has briefed visiting officials at in-house roundtables and officials level talks. The unit also participated in a range of committees and forums where advice on East Asian issues was sought-such as the Committee for the AMC/McKinsey Emerging Exporters Study.
In March 1994, the Minister for Trade, Senator McMullan, released the report Changing Tack: Australian Investment in South-East Asia. This report, arising from the previous publication, Australia’s Business Challenge, surveys the relationship between trade and investment, looks at the factors influencing companies’ investment decisions and examines why Australian companies appear to have generally ignored investment opportunities in South-East Asia at a time when other competitors have moved into the region. The report’s findings received wide coverage, including in South-East Asia, and stimulated a healthy debate on the issues.
The end of April was a busy time for the unit and the Minister for Trade, Senator McMullan, with the launch of another two reports. The ASEAN Free Trade Area: Trading Bloc or Building Block? was released at a seminar function at the Opera House in Sydney. This report was particularly timely and has influenced public debate and policy development in both Australia and South-East Asia on ASEAN’s policy to free up trade flows of manufactured items within those countries. The unit’s first publication on South Asia, India’s Economy at the Midnight Hour: Australia’s India Strategy, released in Melbourne as part of the India Today celebrations, examines the restructuring of India’s economy and its more international focus. It appears to have hit the spot with some 1 000 copies sold in the first two months and more than 400 business representatives and academics paying to attend seminar presentations by the unit in Sydney, Melbourne, Perth, and Brisbane.
Expanding Horizons: Australia and Indonesia into the 21st Century, published in English and Bahasa Indonesia, was launched by Senator McMullan in Jakarta in late June as part of the Australia Today Indonesia ’94 event. Almost 1000 Australian and Indonesian business-people attended the launch. The report presents a collection of papers on economic cooperation by eminent Australian and Indonesian authors and identifies opportunities for future collaboration.
More than 15 000 copies of unit reports (excluding in-house copies distributed or tabled in Parliament) were sold or distributed. Some earlier reports continued to sell at the rate of 20 copies per week, while the more recent reports were still often registering 50-100 copies per week throughout Australia.
A new working paper series intended to promote discussion and policy debate, to assist with identifying and defining areas for future more detailed analysis and to contribute to awareness of current issues affecting Australia’s trade with East Asia was initiated by the unit during the year. These papers reflect the views of individual authors. The first paper, The Japanese Market for Manufactures Imports: The Door Opens Wider, was launched by the Special Trade Representative, Mr John Button, at a business function in March 1994. This paper was also timely, its release coinciding with increasing bilateral tension between the United States and Japan over access to Japan’s domestic market. The report shows that for a variety of reasons a window of opportunity now exists for Australian companies to export more manufactured goods to Japan. The second paper, Links of Steel-the Australian and Chinese Steel Industries, focuses industry and government attention in Australia and China on the changing patterns of demand and supply of steel and steel-making materials in China and explores the potential for the development of links between the two countries. The paper, issued in April, was commissioned by the unit in preparation for future collaborative research between the unit and the Ministry of Metallurgical Industry of China.
Media and other coverage of the unit’s work has been substantial. A new feature of media response during the past year has been the interest of foreign journalists in the unit’s output. Five of the six publications launched this year received coverage in print media overseas, including in Japan, Malaysia, Thailand, and front-page coverage in Singapore, Indonesia and India.
Business response to the unit’s reports has been overwhelmingly positive. Business groups have invited the unit to make presentations to their members and the unit receives offers from individual firms and business organisations seeking to co-sponsor launches of unit reports.
The unit was expanded during the year to employ 12 full-time staff. It seconds staff from outside the Department for three-month periods. During 1993-94 three secondments occurred with officers from the Department of Industry, Science and Technology (ASO5 level), Department of Finance (SOGC level) and an exchange officer from Canada (SOGB-C level) contributing to the unit’s work.
Work continued on a number of issues, including agricultural transformation in South-East Asia, Japan-China relations, the ethnic Chinese diaspora, infrastructure demand in China, sub-regional cooperation in South-East Asia, the Australian and Chinese steel industries, and the potential of the Russian Far East.