Australia-Japan bilateral relationship
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The Australia–Japan partnership is our closest and most mature in Asia, and is fundamentally important to both countries' strategic and economic interests. The relationship is underpinned by a shared commitment to democracy, human rights and the rule of law, as well as common approaches to international security. We also share deep and longstanding trade and investment ties. Japan was Australia's second-largest trading partner and second-largest export market, and third-largest source of foreign direct investment at the end of 2019.
There have been three major phases in the development of the post-war Australia-Japan relationship:
- the establishment of a major trading relationship with Japan shortly after World War II, formalised by the 1957 Commerce Agreement;
- a process of broadening our cultural ties reflected in the 1976 Basic Treaty of Friendship and Cooperation (the Nara Treaty); and
- the more recent emergence of a fully rounded and diverse partnership including important political and security objectives, highlighted by the 2007 Joint Declaration on Security Cooperation and the 2015 Japan-Australia Economic Partnership Agreement (JAEPA).
Today, the warmth and broad scope of the bilateral relationship is articulated in our shared Partnership Agenda.
Australia and Japan have a strong and broad-ranging security relationship. Our two countries work very closely in conjunction with our common ally, the United States, and in critical regional partnerships with countries such as India and the Republic of Korea (ROK). Australia and Japan regularly participate in joint defence exercises and frequently consult on regional security issues, such as the nuclear tests and ballistic missile launches undertaken by the Democratic People's Republic of Korea (DPRK).
The 2007 Joint Declaration on Security Cooperation (JDSC) provides a foundation for wide-ranging cooperation on security issues between Australia and Japan, including in law enforcement, border security, counter-terrorism, disarmament and counter-proliferation of weapons of mass destruction, maritime and aviation security, peace operations and humanitarian relief operations. We have worked closely together in key defence operations, including in Iraq, East Timor, and Pakistan.
Australia and Japan hold regular '2+2' talks between foreign and defence ministers. At the 9th 2+2 talks on 9 June 2021, Ministers reaffirmed the strength of the Special Strategic Partnership. They reiterated their determination to work together, and with the United States and other partners, to maintain and promote a free, open, inclusive and prosperous Indo-Pacific. Outcomes agreed by Ministers included updating the JDSC, deepening cooperation on cyber and critical technology, coordinating vaccine related assistance in Southeast Asia and the Pacific, and improving information sharing. The 2021 2+2 meeting built on the many previous outcomes of the 2+2 process, including an Acquisition and Cross Servicing Agreement (ACSA) on defence logistics cooperation, which entered into force on 31 January 2013, and an Information Security Agreement on the sharing of classified information, which entered into force in March 2013. A revised ACSA was signed in January 2017 and came into force in September 2017.
In 2014, the leaders of both countries elevated the Australia-Japan relationship to a 'Special Strategic Partnership'. In January 2018 then Prime Minister Turnbull visited Japan, and in November 2018 Prime Minister Abe visited Australia, including a historic visit to Darwin. Prime Minister Morrison was due to visit Japan in January 2020, but this was postponed due to the Australian bushfires. Japan provided valuable support for Australia’s bushfire response, including two Hercules aircraft to transport military and civilian personnel, protective masks, and over $5 million in cash donations. Our Prime Ministers' annual meetings are complemented by a host of regular Ministerial interactions.
As COVID-19 has made in-person meetings difficult, Japanese and Australian leaders, ministers and senior officials have continued a high frequency of engagement over video and tele-conferences. Our Prime Ministers conducted their first ever virtual summit on 9 July 2020. The leaders discussed responses to COVID-19 and agreed to work together towards an open, prosperous and inclusive Indo-Pacific region. They also issued a joint statement. The Prime Ministers also welcomed a Memorandum of Cooperation between the Australian Space Agency and the Japan Aerospace Exploration Agency (JAXA) providing new opportunities to increase space collaboration between our two countries.
Australia and Japan have jointly led efforts in support of the Nuclear Non-Proliferation Treaty, including as co-founders of the cross-regional Non-Proliferation and Disarmament Initiative (NPDI) established in 2010. Australia and Japan are also co-Chairs of the Friends of the Comprehensive Nuclear Test-Ban Treaty (CTBT) group.
Australia and Japan are also founding members (alongside the US) of the Trilateral Partnership for Infrastructure Investment in the Indo-Pacific. The Trilateral Infrastructure Partnership promotes sustainable infrastructure development and is focused on mobilising private investment in regional infrastructure.
Australia and Japan are close partners in regional forums such as Asia Pacific Economic Cooperation (APEC) and the East Asia Summit (EAS). Australia supports Japan's aspiration to become a permanent member of the United Nations Security Council. Our 2011 Memorandum of Understanding on international development cooperation facilitates information exchange and cooperation in sectors such as education, health, food security and infrastructure. In 2016, we agreed to a 'Strategy for Cooperation in the Pacific.' The Strategy outlined four areas for cooperation: effective governance, economic growth and sustainable development, security and defence cooperation, and diplomatic initiatives. As a close friend, Australia provided extensive assistance to Japan following the 2011 Great East Japan earthquake and tsunami, including specialised personnel, defence aircraft, and a donation of $10 million.
Japan has ceased its program of lethal whaling in the Southern Ocean, and has withdrawn from the International Whaling Commission.
The Australia-Japan economic relationship is underpinned by complementary strengths and needs. Australia is a safe, secure and reliable supplier of food, energy and mineral resources and a world-class centre for financial and other services. Japan became Australia's largest trading partner in the early 1970s — a position it maintained for 26 years. Japanese investment continues to play a significant role in the development of the Australian economy.
Australia and Japan held the Second Ministerial Economic Dialogue in January 2020. The Dialogue offers a regular mechanism for high-level engagement on strategic economic and trade cooperation to complement high-level defence and security cooperation and annual leaders' meetings. The Dialogue supports the strong and growing trade and investment relationship between Australia and Japan, in new areas such as energy, including hydrogen, and critical minerals. Following the signing in June 2019 of a Memorandum of Cooperation on Energy and Minerals, Australia and Japan signed a joint statement on Cooperation on Hydrogen and Fuel Cells in January 2020.
Japan was Australia's second-largest trading partner in 2018-19, with two-way goods and services trade valued at $88.5 billion. Japan is Australia's second-largest export market.
Goods exports to Japan were $59.1 billion in 2018-19, which was 15.8 per cent of our total goods exports. In 2018-19, Australia's major merchandise exports to Japan included natural gas ($20.2 billion), coal ($19.3 billion), iron ore ($5.8 billion), beef ($2.3 billion), and copper ores and concentrates ($1.8 billion) and aluminium ($1.3 billion). Japan was Australia's largest merchandise export market for key commodities including coal, LNG, beef and aluminium.
On the other side of the trade ledger, in 2018-19, Japan was Australia's third-largest source of goods imports, including passenger vehicles ($7.9 billion), refined petroleum ($4 billion), goods vehicles ($1.9 billion) and gold ($1.1 billion).
Total bilateral trade in services in 2018-19 was valued at $7.1 billion, mostly in the recreational travel, transport and education sectors. Services exports were worth $2.6 billion and services imports were valued at $4.5 billion. The Japan-Australia Economic Partnership Agreement (JAEPA), which entered into force on 15 January 2015, gives Australian exporters significantly improved market access in goods and services and substantially improves investment protections. JAEPA has supported the rise in our two-way trade of some 31 per cent since the agreement started. Both Australia and Japan are key members negotiating the Regional Comprehensive Economic Partnership (RCEP).
Japan is Australia's largest source of investment from Asia and fourth-largest overall, with an investment stock of $219.2 billion at the end of 2017. Japan was the second largest direct foreign investor in Australia ($92.5 billion) in 2017, accounting for 10.9 per cent of total foreign direct investment. Japan was Australia's third-largest destination for foreign investment, with an investment stock of $125.1 billion in 2017.
Japanese investment has been essential in the development of many of the export industries that have driven Australia's growth, including in large-scale projects to meet Japanese demand for resources such as coal and iron ore. Japanese investment has also enabled the rapid expansion of Australia's LNG production, notably by way of the Japanese-led $34 billion Ichthys project located about 220 kilometres off the Western Australian coast.
Japanese investment has also begun to extend beyond the traditional areas of natural resources to sectors such as financial services, infrastructure, information and communications technology, property, food and agribusiness. JAEPA will further boost Japan's diverse and growing investment in Australia, generating employment growth including in regional Australia.
Doing business in Japan
Austrade assists Australian companies to build and implement their export strategies. Austrade's Japan market profile offers practical advice, market intelligence, financial assistance and ongoing support to Australian companies seeking to grow their business in Japan. Austrade also works to promote the Australian education sector within Japan and to attract productive foreign direct investment into Australia. Austrade has offices in Tokyo and Osaka.
People to people links
Early Japanese settlers started the pearling industry in Australia in the late-1800s. Larger-scale migration began after the Second World War, and Japanese continue to settle in Australia today. According to the 2016 census, more than 65,000 residents identified with Japanese ancestry. There were 12,616 enrolments by students from Japan in Australia in 2017, ranking Japan as 13th overall by volume of enrolments for student visa holders. Japanese students enrolled in English courses, VET colleges, and higher education.
There are 108 sister city and state-prefecture relationships between Australia and Japan. These sister city relationships provide opportunities for educational, cultural, sporting, and economic exchanges.
Since 2014, Japan has participated in the New Colombo Plan, a signature initiative of the Australian Government that aims to lift knowledge of the Indo-Pacific in Australia and strengthen people-to-people and institutional relationships through study and internships undertaken by Australian undergraduate students in the region. Under the New Colombo Plan, more than 60,000 students have studied, lived and undertaken work-based activities in the Indo-Pacific. For Japan, the New Colombo Plan has awarded 4,238 scholarships and mobility grants for Australian undergraduates to undertake study and work-based experiences there.
The Australian Government supports the expansion of people-to-people and institutional links through the Australia-Japan Foundation, which provides grant funding for projects aligned with Australia's foreign policy priorities, including in science and technology, sport, arts and education programs. People-to-people links are also supported by several Japan-Australia societies that provide grassroots community support to the relationship.
Most Japanese travel to Australia on short-term visits as tourists or on business. Japan is Australia's fifth-largest inbound market in terms of short-term arrivals, with 498,600 short-term visitors from Japan in 2019. This is an increase of 6.3 per cent on the previous year.
Japan is our fifth largest tourism market by expenditure ($2.08 billion in 2019). In the year to November 2019, 515,000 Australians visited Japan, which was an increase of 12.6 per cent on the previous year.