North Asia matters to Australia because of its economic weight, strategic significance and proximity.

North Asia’s markets account for 60 per cent of our goods exports and 26 per cent of our services exports. North Asia provides around 19 per cent of foreign direct investment into Australia. For these reasons, the department gave priority to our bilateral engagement with these countries, providing policy advice to ministers, supporting high-level dialogue through visits in both directions, negotiating agreements and implementing other activities.

The department promoted high-level engagement with Japan, supporting visits to Tokyo by the Prime Minister (December 2015) and Foreign Minister (February 2016) and concluding a joint strategy for cooperation on Pacific issues. The department supported the sixth ‘2+2’ meeting of foreign and defence ministers which mapped out a program of future security cooperation. Together with the Department of Defence, we continued negotiations on an agreement to improve administrative procedures for bilateral defence activities. We provided timely advice to ministers on issues including Japan’s resumption of whaling and the announcement of the decision regarding Australia’s future submarine acquisition.

Deepening high-level dialogue with China was a priority. We supported visits to Beijing by the Foreign Minister for the third Foreign and Strategic Dialogue (February 2016), Trade and Investment Minister (April 2016) and Prime Minister (April 2016). The Chairman of the National Development and Reform Commission, Mr Xu Shaoshi, visited Canberra for the second Strategic Economic Dialogue with the Treasurer and Minister for Trade and Investment.

In May 2016, the department arranged a visit by Mr Liu Qibao, a member of the Chinese Communist Party’s Politburo and China’s senior political visitor to Australia for the year. We assisted Austrade with Australia Week in China in April 2016, a major business promotion activity involving the Prime Minister, four ministers and nearly 1,000 business representatives. This activity took advantage of increased business interest following the entry into force of the China–Australia Free Trade Agreement in December 2015.

In November 2015, the department organised the second Australia–China High Level Dialogue in Sydney, chaired by former treasurer Peter Costello and former foreign minister Li Zhaoxing. This is the premier 1.5 track activity with China, bringing together 20 influential figures from each country to discuss topical issues in the relationship. Departmental advice to ministers covered issues such as the South China Sea, coal exports, extradition, human rights and e-commerce regulations.

We strengthened our security partnership with the Republic of Korea, including through the second ‘2+2’ meeting of foreign and defence ministers. In response to North Korea’s nuclear test in February 2016 and other provocations, the department advocated for effective implementation of UN sanctions and supported additional listings under Australia’s autonomous sanctions.

The department promoted Australia’s commercial ties with Taiwan, including through support for Deputy Secretary Quinlan’s visit to Taipei in July 2015 for bilateral economic consultations.

We maintained Australia’s strong links with Hong Kong, facilitating visits by the Trade and Investment Minister (August and October 2015 and April 2016) and a visit to Australia by Mrs Carrie Lam, the Chief Secretary for Administration (September 2015).

The department opened the embassy in Ulaanbaatar to improve engagement with Mongolia and further promote Australian interests, including our $10 million development cooperation program.


Promoting a stable and prosperous regional and global environment by cultivating and deepening our engagement with bilateral and regional partners and multilateral institutions

‘2+2’ diplomacy in action

Case Study
Deputy Secretary Gary Quinlan and Foreign Minister Julie Bishop attending the Australia–Japan ‘2+2’ Meeting in Sydney. [DEPARTMENT OF DEFENCE/ABIS Richard Cordell]
Deputy Secretary Gary Quinlan AO (right), supports Minister for Foreign Affairs Julie Bishop (2nd right), with Minister for Defence Senator Marise Payne (centre), Secretary Department of Defence, Dennis Richardson AO (2nd left) and Chief of the Defence Force Air Chief Marshal Mark Binskin AC, Australia–Japan ‘2+2’ Meeting, Sydney, 22 November 2015. [DEPARTMENT OF DEFENCE/ABIS Richard Cordell]

‘2+2’ diplomacy in action

Australia’s ‘2+2’ foreign and defence ministerial meetings are the key bilateral forums for developing and implementing bilateral security and defence cooperation with Japan and the Republic of Korea. This form of diplomatic engagement delivers practical security cooperation through the sharing of assessments on regional security matters, coordination of activities, negotiation of agreements and monitoring of implementation.

On 22 November 2015, the department facilitated the sixth Australia–Japan ‘2+2’ Ministerial Meeting in Sydney. Ministers discussed regional and global issues, including developments in the South China Sea, North Korea and international counter terrorism efforts. Ministers underlined the two countries’ deep engagement in the economically and strategically significant Asia–Pacific and Indian Ocean region. Ministers committed to concluding a joint strategy for cooperation in the Pacific, which was subsequently agreed in February 2016.

Ministers also reviewed progress in strengthening the defence relationship and agreed a range of new initiatives. They welcomed progress in negotiating a reciprocal access agreement covering enhanced administrative and legal procedures and to further facilitate joint operations, training and exercises.

For the second Australia–Republic of Korea ‘2+2’ Ministerial Meeting in Sydney on 11 September 2015, the department in conjunction with the Department of Defence developed a Defence and Security Blueprint agreed by ministers. The blueprint sets out areas for practical security and defence cooperation and builds on our collaboration in multilateral and regional forums.

The meeting also discussed key regional challenges. Both countries expressed deep concern at North Korea’s nuclear and ballistic missile programs and its human rights violations. These meetings show that by working together with our key partners, Australia can play a significant role in promoting a more stable and prosperous regional and global environment.

Improving market access for Australian goods and services, attracting foreign investment to Australia and supporting Australian business abroad

Coal testing in China

Case Study

New standards and testing procedures applying to China’s coal imports are a significant issue in the bilateral trade relationship. The Australian coal industry is concerned about uncertainty and costs for both Australian exporters and Chinese importers. The standards, introduced on 1 January 2015 to address environmental concerns, set limits for certain trace elements.

The department attaches priority to finding a solution—coal is Australia’s third-largest merchandise export to China behind iron ore and gold. During the first year of operation of the new standards, Australia’s coal exports to China declined by 23.6 per cent in terms of volume and were valued at $6.1 billion.

The department is exploring options with the Chinese Government and through the World Trade Organization to increase certainty and reduce costs.

We continued to work closely with the coal industry and Department of Industry, Innovation and Science to take forward concerns and identify acceptable solutions. We are talking with Chinese authorities about streamlining testing and certification procedures to increase efficiency and reduce costs and uncertainty. We are also pressing for a mechanism to resolve inconsistent outcomes where a cargo meets the specifications before departure but delivers a different result when tested at the destination.

The department provided briefings and ensured the issue was raised at the political level by the Prime Minister, the Minister for Foreign Affairs and the Minister for Trade and Investment.

Discussions with China are ongoing. We will continue to encourage China to find a mutually acceptable solution to support unimpeded trade in Australia’s high-quality coal.

Delivering an innovative aid program, centred on the
Indo–Pacific region, which contributes to sustainable economic growth, poverty reduction and regional stability

Supporting economic growth in Mongolia

Case Study
Ambassador to Mongolia John Langtry (centre) with Australian Alumni members, Ulaanbaatar, 30 March 2016. [DFAT]

Supporting economic growth in Mongolia

The Mongolia Australia Scholarships Program (MASP) is central to the department’s development cooperation program with Mongolia.

Developing the skills of its workforce is a key priority for Mongolia. Through the MASP, Mongolian professionals from the public and private sectors receive postgraduate scholarships to gain qualifications that contribute to the economic development of Mongolia. Our program also enhances the opportunities for knowledge-sharing and institutional linkages between Australia and Mongolia.

In line with Mongolia’s National Development Strategy, we offer scholarships in areas including management and commerce, economics, law, political science and education. We have awarded over 400 scholarships since our program began in the 1990s, with 56 supported over the past year. Many of these graduates return to take up senior positions in government, business and community organisations.

The Mongolian Government strongly supports the scholarships program for the exposure it provides to Australian expertise and society and the long term contribution to Mongolia’s human resource development and economic growth.

A tracer study of the awardees under the MASP completed in 2016 highlighted impressive impacts across finance, education, marketing and governance sectors, with high-achieving Mongolian alumni building effective networks and reforming their home institutions based on methods used in Australia.

Promoting women’s economic empowerment and gender equity is a focus of our program. In 2015, nearly two-thirds of Mongolian awardees were women. On their return to Mongolia selected alumni benefit from the MASP Women’s Leadership Program, which provides mentoring support. The department is committed to increasing the number of applicants from provincial areas who face a number of barriers to tertiary study, including low levels of English language proficiency. We have increased the number of information sessions in rural areas to raise awareness of the program and to assist with the application process.

Analysis and outlook

In promoting Australia’s interests in North Asia, the department needs to take account of the strategic landscape, which continues to be marked by political disputes, territorial claims and historical differences between various players that show little sign of abating. One welcome development in 2015–16 was an agreement between Japan and the Republic of Korea on so-called ‘comfort women’ from World War II. Developments in the South China Sea and the change of administration in Taiwan may be factors which influence the strategic outlook going forward. The department will promote further exchanges, activities and dialogues with the region’s key powers.

North Korea’s programs to develop nuclear weapons and long-range ballistic missiles are proceeding in the face of strong objections from its neighbours and the international community. The department will continue to work with our partners and through sanctions implementation to urge North Korea to comply with its obligations and to guard against proliferation.

Economic restructuring and weaker growth in some North Asian markets had an impact on trade outcomes. Australia’s domestic commentary about some foreign investment was noticed in North Asia, affecting investor sentiment. The overall value of Australia’s exports to North Asia declined by 9 per cent, given the fall in global commodity prices due to reduced demand in China and the passing of the resources boom, even as export volumes of some commodities increased. Export results in certain areas, including agriculture, showed improvement following entry into force of the bilateral FTAs with the Republic of Korea, Japan and China.

Australia’s shared interests with North Asia and the bilateral architecture in place with key partners provide a very good foundation for future development of ties in the political, commercial and strategic areas.

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