The Indo-Pacific Region 2: Copyright R. James Ferguson 2000, 2001

INTR13-305 & INTR71/72-305, The Department of International Relations, SHSS, Bond University, Queensland, Australia

2. Australian Foreign Policy - From Commonwealth Servant to Regional Player

Topics: -

1. Elements of Foreign Policy

2. Australia's Foreign Relations Culture in the 1990s

3. The APEC Process and Australian Multilateralism

4. A Suitable Foreign Policy for a Middle Power?

5. Bibliography and Further Reading
 

1. Elements of Foreign Policy

It is unwise to discuss foreign policy without knowing what it is. Today, we will look at the elements of foreign policy, and begin to see how they relate to national interests. We will then look at the current foreign affairs culture in Australia, and provide one detailed example of a multilateral approach in foreign policy, the APEC group (Asia-Pacific Economic Cooperation).

Among the central determining forces of foreign policy are the nation-state's decision-makers. Whilst decision-makers may vary in their determinations of suitable foreign policy, depending on their political orientations, there are certain enduring influences on those decisions irrespective of who leads the government. Geography and natural resources are obvious physical factors that, in the absence of territorial conquest or loss, have an enduring influence on foreign policy. Less permanent but equally important determinants of foreign policy are a nation's industrial and military strength. The human element, to which the decision-makers themselves belong, is another category of influence. The human element is both quantitative in terms of sheer numbers, and qualitative in the sense of civilisation - their material, philosophical, and political culture, their remembered past, their educational-technical strength.

Elements of Foreign Policy

One author, the American academic Roy Macridis, has summarised the elements or ingredients of foreign policy as follows (Macridis 1992, pp1-2):

A. The relatively permanent material elements
 

1. Geography

2. Natural Resources

a. Minerals b. Food production c. Energy and power


B. Less permanent material elements
 

1. Industrial establishment

2. Military establishment

3. Changes in industrial and military capacity


C. The human elements: quantitative and qualitative
 

1. Quantitative - population

2. Qualitative

a. Policy makers and leaders

b. The role of ideology

c. The role of information


To British academic William Wallace, it is more helpful to think of constraints than ingredients of foreign policy (Wallace 1971). Thus where Macridis draws up a list, Wallace draws a boundary. He - like others - believes foreign policy must be formulated within a context of both international and domestic (internal) constraints. International constraints include (Wallace 1971, pp18-19); -

1. a state's geographic position; 2. its relative strength in terms of its population, military, economy and natural resources; 3. foreign policy attitudes of other states; 4. international opinion; 5. international mores, or shared values on acceptable and unacceptable behaviour; 6. international law. Here we should notice the interaction between powers and constraints: even a quite powerful state may find itself constrained, either voluntarily or involuntarily. Thus Germany and Japan are both powerful states, but constrained both by the international system and by the voluntary limits on military strength.

Turning now to an Australian academic, Hugh Smith. According to him there are:

(a) obvious constraints which he calls "limitations in an objective sense";

(b) "how we perceive and respond to these 'givens'"; and

(c) "subtle constraints" of a non-physical type (Smith 1992, p19).

To these Smith adds certain cultural determinants in the Australian case: - "We share democratic values with a number of other countries. Politically, socially and culturally we look to Europe and North America, an orientation reinforced by the Commonwealth connection, by migration patterns and by the English language." (Smith 1992, p19). This remained true in the late 1980s, but has been changed by a recent attempt to comprehensively engage Asia, to encourage the acquisition of Asian languages, and a growing entrance of Asian immigrants under educational schemes and normal, humanitarian, reunion and business migration schemes. These changes are beginning to be reflected in the Australian population base. In the early 1990s approximately 94.4% were white, 2.1% Asian (differing estimates suggest in the late 1990s an Asian originate of some sort for up to 5%) and 1.1% Aboriginal; 77% were native born and 23% foreign born. The proportion of foreign-born parents is 40% (see Blainey 1994). As of the 1996 census, 23% of Australians were born overseas, and one-twelfth of the population in total was born in a non-European country. Likewise, there has begun to be some cultural impact on Australia: Asian languages are no regularly taught in secondary and primary schools, and have a somewhat greater presence in university curricula. Likewise, a wider range of religions are now active within the country, and Buddhism is one of the country's fastest growing religions. Yet, Australia overall still retains a dominantly Anglo-Celtic, European, and Christian culture.

Interestingly, Macridis' elements of foreign policy are akin to the factors normally cited as determining the power of any nation. Wallace and Smith also speak of constraints that limit one's ability to act on the international stage. This suggests that the essential elements or ingredients or constraints of foreign policy - whatever one wishes to call them - are also the factors which determine the 'power' of any nation to pursue its will. Before entering a more detailed discussion on these power factors, it is worth pausing to decide whether this is a depressing or intriguing proposition. It may be depressing to those who abhor the implication which arises - that of 'power politics', whereby the struggle for power is paramount in international politics. It may be intriguing when power is employed toward the improvement of the quality of life for the international community.

As we shall see, Australian foreign policy has shifted towards a more cooperative model in recent years, allowing for a cooperative approach which allows regional empowerment. Australia's defence policy, however, had relied on great allies for regional stability, and self-reliance for immediate security, and is much more cautious about regional empowerment. This is beginning to change, but also reveals a certain tension between defence policies (unilateral or alliance system), and regional engagement approaches which are trying to support organisations like the ASEAN Regional Forum to begin to deal with security issues at a multilateral level (see Grant & Evans 1995; Ball & Kerr 1996). Efforts at defence engagement peaked in 1997, but may need to be reappraised due to the economic and political crises of 1997-1998 which has reduced the stability of some Southeast Asian nations.

2. Australia's Foreign Relations Culture in the 1990s

Australia's foreign policy has moved from a reliance on Britain and then America to a more independent foreign policy. In large measure, the earlier policy of dependence was based on a realistic conception of the insufficiency of Australian economic and military power in the face of the wars of the 20th century. We will explore in more detail the impact of great powers (China, Japan) and the remaining superpower (the U.S.) on the Indo-Pacific in later lectures.

Australia has also moved far from its early framework within the British Empire and the Commonwealth, though Australia still cooperates with this grouping in areas of human rights and development. From 1991, "the Harare Commonwealth Declaration set the association firmly on a new course for a new century: that of promoting democracy and good government, human rights and the rule of law, and sustainable economic and social development."(1) This organisation has been critical of various forms of discrimination and human rights abuses in South Africa, Nigeria and Fiji, and retains some international level of international leverage through its regular leaders meetings which occur every two years (CHOGM: Commonwealth Head of Government Meeting).

External Resource:

For information on the 53 Members of the Commonwealth, go to

http://rcscanada.org/branch1/members.html


Now, however, let's turn back to the culture of Australian foreign policy which began to emerge in the late 1970s, but which only found full fruition after the end of the Cold War (post-1989), and in the light of Chinese economic reforms in the 1980s. This new policy has been characterised by a number of features: -

1) Changing relationships with China, Japan, Russia and Southeast Asia

2) A recognition of the priority of economics over purely military concerns

3) A shift away from European and American concerns to a more Asia-centred approach

4) Some shift from bilateralism towards a more multilateral approach, e.g. in relations with APEC and ASEAN, as well as to the ASEAN Regional Forum (ARF) and Asia-Europe Meetings (ASEM), though there has been some return to bilateralism in 1997-2000.

5) A quest for greater defence self-reliance, while recognising the strong role of U.S. forces in the Asia-Pacific region as a whole.

These trends have also allowed a softening of foreign policy to include a large number of issues from the area of 'low politics'. For example, environmental issues have taken on a stronger role in international affairs, a fact marked for example by the United Nations 1987 Brundtland Commission on Environment and Development (Evans & Grant 1995, p11). In this setting, the Australian government has pursued policies to stop the prospect of mining in Antarctica, is concerned over the holes in the ozone layer, and has stressed the need to environmentally sustainable resource development in the South Pacific.

On the other hand Australia, with its large coal industry, has found it difficult to accept internationally proposed targets for greenhouse gas emissions, and has found even keeping to 5% increase over 1990 emission in the year 2010 difficult to accept (Hogarth 1997). Tense negotiations in Japan resulted in Australia negotiating to allow an 8% increase in 2008-2012 over 1990 levels, and Australia was one of the few countries that was allowed an increase rather than a decrease in emissions. The Howard government's stand in the 1998 Kyoto Environmental Conference was a triumph in the short term, since it imposed less strain on our economy, but has brought into question Australia's reputation as an environmentally aware nation.

Other areas of concern have been over international health issues (e.g. the spread of new diseases globally), the international drug trade, roles in peace-keeping activities, a strong commitment to arms control and arms reduction protocols. This has lead to a strong concern, as repeatedly articulated by former Foreign Minister Gareth Evans, that Australia should be a 'good international citizen'. This is not just an ethical issue, but also a way for a middle power to gain influence and extra international standing. As suggested by Evans, 'Idealism and realism need not be competing objectives in foreign policy, but getting the blend right is never simple' (Evans & Grant 1995, p11, see also pp40-1). Such international respect is crucial if Australia wants to influence the international agenda, e.g. the formation of a group of disparate nations to link agricultural policies of reform the world trade process (the Cairns group which a quite effective role in the negotiations of the General Agreement on Trade and Tariffs, see Evans & Grant 1995, p37).

This 'greening' of environment policy has been somewhat less successful when faced with the economic opportunities of East and Southeast Asian nations. The 'Ascent of Asia' thesis has provided the main impetus for a reorientation of foreign policy towards Asia. This correlates with real shifts in economic power: the Asia Pacific region as of 1995 generated 2/5ths of the worlds' trade, and over half of its 'economic output' (Evans & Grant 1995, p13). This reality is emphasised by sustained economic growth rates in the region down to the mid-1990s (for Southeast Asia, averaging 7.6%, Teo 1996). Today, some 45% of global trade runs through the wider Asia-Pacific Region. Japan, and in the future China, may emerge as economic superpowers. This transformation can rightly be called a 'revolution' in East Asia, with some estimates suggesting that by the year 2010 this region could account for as much as 34.6% of global GDP, more than either Western Europe or the NAFTA area (U.S., Canada, and Mexico), though there has been a serious slowing of Southeast Asian growth in 1997-1998. However, this rapid growth has also led to massive impact on the environment, including considerable deforestation, water and air pollution, and depletion of marine resources. The bushfire and air-pollution crisis of late 1997, due to uncontrollable fires in Borneo and Sumatra, is only a symptom of a much wider environmental problem. Economic growth, though beneficial in some ways, has led also to major ecological issues which have international implications.

This has led to a direct restructuring of Australia's diplomatic and research capabilities. Asian embassies were upgraded and expanded, and given high status. In 1991, the East Asia Analytical Unit was created within the Department of Foreign Affairs and Trade in Canberra to produce research, right major reports, and brief key government and business groups. Since that time, a large number of seminars, business briefings, grants to business groups and universities, efforts at promoting Asian languages in universities and schools, funding of linkages to Asian institutions, etc., have all tried to follow up this Asia-connection (for one of the strongest arguments in favour of this reorientation, see Dobbs-Higginson 1993, pp1-20). Various Parliamentary subcommittees have also reviewed Australia's economic, trade and security relationships with Asia (1997 reviews included Australia's relations with ASEAN, and trade relations with India).

These facts have encouraged a certain de-coupling of Australian foreign policy from the policy of other states, especially the United States The Whitlam government from 1972-75 began these procedures by realising that America's and Australia's interests did not always correlate - in other words, being a military ally to the U.S. did not form the entire direction and focus for Australia's foreign policy (Evans & Grant 1995, p16). This was signalled first by the withdrawal of Australia from involvement in the Vietnam War (in 1973), an intense debate over U.S. bases on Australian soil (some of which were made more accessible to Australian oversight), and a willingness to begin the process of recognising the communist governments of North Vietnam and China.

Busy Taipei skyline: Australia is engaging with the economies of Asia

(Photography ©: R James Ferguson 1998)


The independent 'flavour' of Australian policy from this time has been summarised by Evans and Grant: -

Before very long, Australia had recognized China, North Vietnam, East Germany and North Korea; withdrawn our military from <South> Vietnam and our aid from Cambodia; stopped wheat sales to Southern Rhodesia; provided some indirect aid to South African liberation movements; and arraigned France in the International Court of Justice for its nuclear tests in the South Pacific. Australia was also busy during Whitlam's prime ministership in contracting cultural agreements with the countries of Asia and the Pacific; removing racial discrimination from immigration procedures (non-European immigration had begun in 1966); increasing development assistance; bringing Papua New Guinea to independence; re-establishing sympathetic relations with Third World countries in the United Nations and elsewhere (in 1974 Australia attended as an observer at the Non-Aligned Movement Conference); opening up the Australian market, especially to textile, footwear and clothing imports of the region. (Evans & Grant 1995, pp26-7) Certain elements of this shift of policy were slow and hard to establish: in the early 1990s, for example, Australia still had import tariffs averaging approximately 20%, making it a still rather protectionist economy, though the government aimed to reduce this to an overall level of 5% by the year 2000 (Dobbs-Higginson 1993, p209, p213). Yet throughout this period, and the following Bob Hawke government (1983-91), America remained Australia's dominant defence ally, and efforts were made by Australia to sustain the ANZUS arrangement in spite of New Zealand's objection to nuclear-armed vessels visiting its ports (on this issue, see Mack 1988). In this sense, there was a considerable lag between foreign policy and a more cautious defence policy.

This would begin to change with a White Paper tabled by the then Minister of Defence, Kim Beazley in March 1987 (The Defence of Australia). Although still relying on the regional presence of the U.S., and on U.S. communications and intelligence networks, the policy moved to a much stronger self-reliance, focusing on the ability to fight a short war in the region, and to use long range air and sea strike abilities. The policy advanced four major objectives, 'independent defence of Australian territory: promotion of regional security and stability; capacity to meet alliance obligations; and contributions to global strategic security' (Evans & Grant 1995, p29). The 1987 White Paper also established a region of primary national defence interests. This included an area of immediate and direct military interest (Australasia, i.e. Australia, New Zealand, New Guinea and nearby South-West Pacific), and a more extended 'area of primary strategic interest', including parts of the Indian Ocean, Southeast Asia and more of the South West Pacific (Evans & Grant 1995, p33). Australian involvement in the South Pacific was seen as particularly important since the U.S. decline in interest in this area (Sadow 1993) after the end of Soviet projections of naval power into the Pacific and Indian oceans. As we shall see in later lectures, this trend would be reinforced in later defence policies with an even stronger emphasis on regional affairs and regional involvement. There was also some move towards seeing security in a broader way, including economic and trade issues, and linking these factors to multilateral understandings with Southeast Asia (Evans & Grant 1995, p38). There was also an attempt during this period to more closely correlate foreign policy and defence policy, as underscored by the publication in 1989 of the Foreign Minister's Statement on Australia's Regional Security (Evans & Grant 1995, p46). Whether these areas of primary concern are within Australia's defence capacity, however, will be discussed in later lectures.

Through the early 1990s, these general trends were even more strongly developed under the Keating government: -

Paul Keating as Prime Minister was able to build upon this foundation when, in April 1992, he publicly articulated his strong personal commitment to linking Australia's destiny even more comprehensively with that of the Asia Pacific region in which we live. He set about - through a heavy program of overseas visits and the building of close personal links with regional leaders - developing and articulating a vision of an economically integrated region of which Australia was unequivocally a part. The main institutional vehicle for this vision has been the APEC Leaders' Meeting, a personal initiative of Keating's, the inaugural meeting of which, under President Clinton's chairmanship, was held in Seattle in November 1993. That year, 1993, produced what has been described as 'a full hand of Australian foreign policy successes', all of which had been some years in the making: this major step forward in the consolidation of APEC; the successful conclusion of the Uruguay Round, locking agriculture into the GATT system for the first time (which had been the primary objective of the Cairns Group); the UN-organized elections in Cambodia; the conclusion of the Chemical Weapons Convention; and the decision to establish a new Asia Pacific security dialogue process, the ASEAN Regional Forum. (Evans & Grant 1995, pp30-31). It is not enough, however, to simply speak of the foreign affairs of a nation as if they were run solely by the Minister of Foreign Affairs, by Defence and Trade Officials, and by the Prime Minister. Other groups are involved. These include parliamentary standing committees, e.g. the Joint Committee on Foreign Affairs, Defence and Trade. Likewise, other lobby groups can be very powerful. The media, too, as a collective grouping have considerable influence. From 1975 down to the late 1980s the press in Australia ran a public view of Indonesia largely at odds with the relationships promoted by the Australian government. Although most of the press seem to have joined the 'Asia now' bandwagon, lingering concerns over press coverage and protest issues were probably the main reason former President Suharto of Indonesia had been reluctant to visit Australia. Likewise, the agricultural and farming lobby (only partially represented via the National Party and other political groups), has been vocal in its demands for reform in the international trading system, and has been most critical of U.S. policies in subsidising their export agricultural sectors (especially from 1992, when a mini-trade-war between the European Union and the U.S. resulted in casualties in the Australian export of beef, sugar and dairy products, see Dobbs-Higginson 1993, p220). In the late 1990s, Australia has also been concerned about losing grain and livestock export markets into the Middle East, as well as periods when lamb could not be readily exported into America. At the same time these problems should not be exaggerated: between 1994 and 1998 overall Australian exports to the U.S. increased by 82% (Downer 1999). Today, Australia seem to need to both renew and redefine the relationship with America, in part on the basis of the current trends in Asia and the world economy (see Wolpe 2000).

In general, we can speak of at least four other groups which act as influential mediators of a successful and accepted foreign policy. Within Australia these include the business community (especially those involved in protected or exporting industries), workers and their trade unions, the electorate at large which take into account the foreign policy performance of governments, and attitude brokers in administration and education who shape intellectual awareness of Australia's role in the world. With the exception of some elements in the trade union movement, who fear an erosion of working conditions and workers rights, most of these groups have swung behind Australia's push to be more involved politically and economically in the region. This does not mean, however, that these groups suggest that Australia should become more Asian, nor are they keen to seen Australians involved in Asian wars.

The change of government after the 1996 election of the Coalition (Liberal and National Parties) government has not lead to any serious change to the general approach of an active role in the Asian region. There has been some greater emphasis on bilateral (country-to-country) relations over multilateral systems (see Department of Foreign Affairs and Trade 1997). However, Southeast Asia, Indonesia, China and Japan have been given priority treatment, as indicated by regular visits by high level Australian government leaders.

Generally, it must be noted, however, that Australia's engagement with Asia is not risk-free. Areas of tension existed, both under the Keating and Howard Governments. Nagging issues like revision in policy towards East Timor (Cotton 1999), human rights, the demands of the union movement, charges of racism, continued public perception of security threats in the 1990s (see Cottrell & Makkai, 1995, pp59-71), fears of labour and environmental problems deepening, and the problem of illegal refugees will continue to complicate Australia's role in the region. There are more specific areas of difficult entanglement, e.g. complications in Australia's relationship with Malaysia over different visions for the membership of regional organisations, and Australia's strong defence commitment to the U.S., which the PRC sometimes sees as trying to 'contain' China. Likewise, the very public nature of Australia's engagement with Asia has meant that overseas brokers and financial institutions see the Australian financial and trade system as depending on Asian prosperity. Hence, it has been possible for Australia to catch a mild form of 'Asian flu', with the Australian dollar dropping below .6 U.S. dollars in late 1998 and remaining quite low through 2000. This did not result in sustained problems, but indicates that exclusive strategies engaging one region of the world can sometimes be dangerous. Here a strategy of wider engagement, including some return to European markets, needs to be carefully considered.

An area where there is some change in the new government is in the area of defence. Although happy to be further involved in confidence building measures through regional dialogues such as the ASEAN Regional Forum, the current government has reiterated that the U.S. is its senior ally. The new Australian government, in contrast to other regional states such as Thailand, had said it would be willing to allow U.S. forces to preposition equipment in Australia in the case of armed conflict within Asia.(2) Although this proposal did not result in any new stockpile or basing agreements, it did result in 1997 in another large joint military exercise being run in Central Queensland (10-22 March), exercise Tandem Thrust, which involved sizeable combined U.S. and Australian forces. The purpose of this exercise was to demonstrate "the closeness of the military-to-military relationship between the U.S. and Australian Defence Forces by combining efforts to strengthen the alliance between the two countries to pursue common regional and international security objectives and contribute to the preservation of security and strategic stability in the region".(3) Forces utilised included some 27,000 troops, 43 ships and 229 aircraft. Most recently, Australian communication bases have become important again as part of the new anti-missile defence system being developed by the U.S. in 2000-2001.

This seems to correlate with recent moves to reinforce the U.S. military alliance system throughout the Asia-Pacific region. Not only has the Japan-US security understanding been reconfirmed, but in their April 1996 summit the then Prime Minister Hashimoto of Japan and President Clinton agreed to step up bilateral cooperation to deal with potential regional emergencies. It seems that recent tensions over U.S. bases in Okinawa has not seriously weakened the inter-government relationship, perhaps because the U.S. agreed to return some 20% of the land used by U.S. bases to local control.(4)

There have been recent calls within for a wider security architecture to be put in place in the region, based on the U.S. alliance,(5) perhaps including a high-altitude missile defence system designed to counter any threat from medium range North Korean missiles. This move was not supported by all Japanese, indeed 70% polled seem to prefer the status quo based on the pacifist 1947 Constitutional arrangements,(6) and the Social Democratic Party was critical of this widening to include all of the Asia-Pacific region. In effect, this could be interpreted as directed again China and North Korea. Some deepened move towards a regional high altitude anti-missile defence system has been mooted for Japan, and even more controversially for Taiwan in 1999. As of January 2000, the U.S. was also testing new anti-missile systems that might be able to intercept long range ICBM missiles, a move which some think will result in a new arms race. Likewise, any extension of such systems into Taiwan would definitely prove provocative to mainland China.

The recent discussions towards deepening Australia-Japan defence ties suggest that this broader security agenda centred on the U.S. might be making some headway. In early 1997 the then Australian Defence Minister McLachlan also suggested that Australia would be willing to send Australian troops to South Korea if the disastrous famine in North Korea sparked off another conflict in the area (Lague 1997). The idea at first glance seems archaic thinking drawn from the 1950s, but the statement may have some symbolic value, i.e. staking a claim for Australia to be involved in a small way in Northeast Asian security affairs. Australia in 1997 has also begun to move towards deepening defence cooperation through much of Southeast Asia, suggesting a shift in its main strategic interests. At the same, there was also a danger that both Australian foreign affairs and defence policy could become more assertive, with Australia trying to demonstrate a leadership role in some areas. This was indicated last year with early Australian liaison with North Korea as it opened to improved ties with South Korea and the U.S.

These trends reached peaked in 1999 with Australia being the main supplier of forces to a U.N. operation in East Timor (we'll look at this in detail in next week). This commits Australia to both a larger defence budget, as well as a sustained presence in East Timor if the small nation is become viable (for an initial study, see Saldanha and De Costa 1999). This trend will be worth watching over the next few years. This action has already strained relations with Indonesia, led to some increased concerns in ASEAN as a whole, and hold a question mark over the future role of the ASEAN Regional Forum in such crisis areas.

We can express this change of nuance in another way. Former Foreign Minister Evans emphasised the role of Australia as a good international citizen, while former opposition Shadow Minister Hill in 1993 argued that Australia's foreign policy should be based on 'enlightened self-interest'. Though these two policies tend to overlap, we can see areas where they diverge. The current government in 1996-1998 committed itself to some reduction in overseas aid, and it is possible that more aid will be distributed through Non-Government Organisations (NGOs). Foreign Minister Downer has also been critical of other aid projects, suggesting that they should not be used to boost Australian companies' involvement in overseas projects, nor are they 'foreign policy by other means'. Downer has also suggested that aid should go to relieve poverty, and is less keen on large prestige projects such as the My Thuan Bridge in Vietnam (Greenless 1996). This humanitarian streak, however, might also turn out to be a lever justifying a reduction in aid levels generally. Aid in 1998-1999 was only 0.26% of GDP, well below that offered by many economically advanced countries. Overall, total aid dropped from 1995 levels through 1996-1998, but projected levels for direct overseas aid in 1999-2000 have once again increased past the $1.5 billion level.(7)

We can see, however, that new aid commitments will crop up in response to foreign policy initiatives. In relation to the East Timor crisis, it was already recognised in December 1999 that much aid would have to be provided to the island. In a press release by Foreign Minister Downer it was stated that: -

The Australian Government has strongly supported East Timor through the largest emergency humanitarian program ever undertaken by Australia. The contribution I am announcing today will help build the foundations of a democratic and independent East Timor. Australia's total program of assistance to the East Timorese this financial year will be at least $75 million.(8) This may turn out to be conservative estimate of the Australian contribution in total terms. It remains to be seen with an economically independent East Timor will emerge in the medium term.

3. The APEC Process and Australian Multilateralism

At this stage, we can turn to one cooperative regional approach in which the Australian government is deeply involved.
 

Figure 1: APEC, Key Facts (9)

Members: (1989) Australia, Brunei, Canada, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, USA; (1991) China, Taiwan, Hong Kong; (1993) Mexico, Papua New Guinea; (1994) Chile; (1998) Peru, Russia, Vietnam

Size: 21 economies, 2.4 billion people, combined GDP US$17 trillion; approx. 45% of global trade.

Keydates:

1989 Established and first ministerial meeting (Canberra)

1993 First leaders meeting (Seattle)

1994 Adoption of 2010/2020 free trade targets

(Bogor, Indonesia)

1997 Adoption of Manila Framework for economic crisis

1998 Cooperative Growth Strategy
 
 

The roles of China, Japan and the U.S. remain central to the future of the Asia Pacific region. Therefore, relationships between these three powers need to be considered closely. One organisation which embraces all these groups is APEC, the Asia Pacific Economic Cooperation forum. Note that this is not a community, and that 'cooperation' suggests a process rather than a static institution. It is not a union, like the European Union (see Ferguson 1995). APEC was an idea originally developed by Japanese academics, who first proposed a Pacific 'free trade area' in the 1960s, but a reshaped version of this idea was announced by Bob Hawke on a visit to South Korea in 1989 (Dobbs-Higginson 1993, p220). APEC, first established through 1989-1992, seemed to stall during the 1993-4 period, but had picked up momentum once again in 1995-6. The Osaka meeting in November 1995 seemed to signal the stage at which a 'critical mass' had been achieved (McGregor 1995), with all 18 members on track to moving towards trade liberalisation and economic co-operation (further developed in meetings in July and November 1996). In 1997-1998, new members, including Russia, Peru and Vietnam, were announced, as was a ban on new members for a further ten-year period.

Although inclusive of most Asia-Pacific nations, APEC has several areas where it can face possible opposition. The first of these is in its 'free trade agenda' as established in the Bogor Declaration of the 1994 APEC Indonesian summit, whereby all members would aim for free trade regimes, developed nations by 2010, and developing nations by 2020. Unfortunately, as Chalmers Johnson has noted, this could be difficult for both the U.S. and Japan (1994a; 1994b). Acrimonious negotiations on trade between the U.S. and Japan in the early 1990s suggested firstly, that the U.S. needs to have managed trade with relation to Japan, not free trade as such. Second, if non-tariff barriers are considered, certain segments of Japan's economic strength, and hence its comprehensive security, could come under threat. Ironically, to diffuse these concerns, Japan may need to bolster even further the growing intra-Asian trade, and in the long term be willing to accept manufactured products from Asia into its own market (Johnson 1994a; Johnson 1994b). This can only be done if development in Asia is further stimulated, and Japan can move away from technological competition with its Asian neighbours. Here, ironically, U.S.-Japan Trade disputes, though complicating debates on APEC, is also one of the best arguments for improving regional trade relationships through a 'rapid upgrading of the process' of APEC (Bergsten 1994, p22). This process could include a wide range of agreements which go beyond the issues of tariff barriers and could include 'proposals for mutual recognition of product standards and domestic testing and monitoring procedures, cooperation in national competition (including anti-dumping) policies, avoiding region-wide problems from rules of origin included in the various subregional agreements (including NAFTA), annual ministerial review of the entire "trade facilitation" program, and technical cooperation in promoting infrastructure projects such as higher education and telecommunications networks' (Bergsten 1994, p22).

The People's Republic of China, too, had some difficulties with the APEC agenda. PRC has taken some years to come into line with all the requirements of GATT and the World Trade Organisation (WTO). It was not possible with the recent US opposition to her membership, for China to meet the self-planned-target of gaining admittance in 1995.(10) In so far China is concerned, serious issues on the trade front including tariffs, quota restrictions, and 'illiberal' policies to certain sectors of foreign imports (11) suggest that meeting free trade targets through the APEC agenda by 2020 (for developing nations) is indeed a serious commitment by PRC leaders. At the Osaka meeting of APEC the Chinese President Jiang Zemin announced that China would cut tariffs by 30% from 1996, reducing 170 quotas and cutting tariffs applied to some 4,000 items - this will result in a drop of tariff level from 35.9% to 22%.(12) China has used the voluntary APEC targets to establish a track record and to cushion the gradual opening of her economy. This in part set the foundation for the deal done between the U.S. and China in late 1999 for the PRC's entry in the WTO. China in 1999-2000 made substantial progress in meeting the requirement of trade liberalisation for entry into the WTO.

Yet these trade tensions, along with strategic tensions over Taiwan, may be part of a deeper undercurrent of conflict over 'Asian values' and whether the U.S. can accept an ascendant, independent group of powerful East Asian nations (see Hitchcock 1994). China, in particular, through 1996-7 has strongly rejected U.S.-lead criticism of her human rights record, and has suspected the U.S. of running a dual policy of tentative engagement and preparing for containment of China's growth and interests. The Clinton-Zemin summits of 1997-1998 helped reduce some of these tensions, though human rights issues remained a prominent issue in the American media and for the U.S. administration (Bodde 1997; discussed further in lecture 4). Tensions resurfaced in 1998-1999, but have not entirely destroyed the APEC process. With the new Bush administration of 2001, it is possible that the U.S. may once again seek to establish a stronger line against China.

APEC has also been criticised for being too top-down, with poorer and less skilled workers being at risk as their countries rapidly open up to competition aboard. Although good for national economies as a whole, those engaged in the farming of traditional crops or in less efficient industries might find themselves unable to adjust. The result could be a new economy of two cultures: the skilled and well-off, the dislocated and poor. This has led to major protests in the Philippines and Thailand, as well as smaller protests in the U.S. and Australia.

APEC, due to the diverse nature of its members, has to retain a flexible approach based on the voluntary commitments made by different states. Here Prime Minister Mahathir's (Malaysia) ability to add an addendum to the free trade aspects of the Bogor declaration, whereby the 2020 date was a non-binding target, should not be of particular concern - far from being a 'dangerous precedent', this flexibility signals that the APEC forum is indeed based on consensus and cooperation, not on competitive coercion.(13) From this perspective, persuading rather than coercing member states may be a better long-term approach.

If competitive, zero-sum games are allowed too intrude too closely on the APEC political process, then certain members may fear that APEC is in the interests of some members, but not others. Here Prime Minister Mahathir of Malaysia has already expressed fears that Australia's actions are really a cover for U.S. desires to take over the regional cooperation process. He had suggested an all Asian EAEC (East Asian Economic Caucus) which excludes the U.S. and Australia. In late 1999, an ASEAN-plus-three meeting (with China, Japan and South Korea) indicates that Southeast Asian states are willing to work with a range of different groups to meet their goals. Once again, we can see than an APEC trade agenda cannot work without its policies being sensitive to the core concerns and threat perceptions of its members.

A third major factor to be taken into account is a slow but steady progress towards a shared East Asian consciousness. This emerging consciousness is only in its infancy, but several shared characteristics of East and Southeast regional awareness has already been identified by Noordin Sopiee (among other roles, Sato' Dr. Noordin Sopiee is the Director General of the Institute of Strategic and International Studies and Malaysia's member in the Eminent Persons Group of APEC). These factors include: -

First, as in the cultural realm, there is the discovery of a common perception, empathy and position on the key issues of our time - human rights, democracy and the environment - as vigorously pushed by the West.

Second, the fact and the perception that East Asia is increasingly coming under siege; the region is perceived to be increasingly under economic and political attack.

Third, given the rise of East Asian economic, cultural and political confidence and pride and its continued vulnerability and comparative powerlessness, there is the natural desire for empowerment on the world stage. (Sopiee 1995, pp190-191)

Likewise, there has also been serious discussion of an Asian need to re-assert indigenous cultural values in conjunction with economic development in order to avoid de-humanising aspects of modernisation and Western capitalism (Alatas 1995, p12). These perceptions need to be taken into account in the diplomatic process which builds common ground in institutions like APEC.

The tensions between East and West were also reinvoked during the 1997-1998 financial and economic crisis. In particular, strong tensions between Asia and the U.S. emerged in debates over the causes and the remedy for the crisis. Some in the U.S. argued that cronyism, lack of transparency, and a false model of corporate-government cooperation were at the heart of the crisis, i.e. the so-called 'Asian miracle' was a mirage (Harding 1998). On the other hand, some Asians argued that U.S. financial institutions had eagerly pumped vast amounts of short-term hot money into the 'immature Asian banking systems and securities markets', followed by the activities of American speculators, and that the U.S. has also been reluctant to top-up the IMF to help deal with the crisis (Harding 1998). The risk of a second round of crisis, and the potential long term effect on American trade, clearly indicate that a strongly cooperative approach is needed to stabilise regional and global financial systems.

To date, there is a real chance that the APEC process can continue, but only as long as the real situations and needs of East Asian states are given a central place in policy formation and agenda setting. This must include the Japanese need for comprehensive security, and China's sense of technological and political vulnerability as it continues to modernise itself. Furthermore, this is not just an Asia-Pacific problem: tariff reductions through the proposed APEC agenda can not only increase GDP in the PRC (People's Republic of China), ASEAN nations, and the region as a whole, but also contribute to world economic growth and act as a catalyst for further progress in World Trade Organisation agreements.(14) If these and other concerns are taken into account, than there can be a slow but progressive shift towards more positive-sum games in the Asia Pacific region. APEC, down to 2000, has been a successful institution for promoting regional empowered and reducing destructive forms of trade competition. APEC has been an effective motivator in bringing down trade barriers alongside WTO agreements (Batino 1996), and has also managed to coordinate a wide range of technical and economic cooperation.

The 1997 and 1998 APEC meetings were test-cases to see if the organisation could provide regional leadership in dealing with economic crises. The APEC leaders agreed 'to endorse the idea of a new regional framework for enhanced Asia-Pacific regional cooperation, to promote financial stability and to establish what is known as the APEC fund', as well as setting up an early warming system to avoid currency crises (Wanadi 1997). The latest APEC also included proposals on human resources development and proposals to help small and medium enterprises engage in growth in the Asia-Pacific region (Wanadi 1997). However, the 1997 initiatives were still much too weak to really alter negative economic trends in the region, and left serious financial aid to the IMF.

The 1998 meeting of APEC was a major opportunity to begin to tackle Asian economic problems in a concerted way, with one of the most constructive plans, The Concerted Asian Recovery Program (CARP), designed to reduce interest rates and stimulate economies throughout Asia (Kelly 1998), being presented at that time. The key aim of this approach was to coordinate these reforms simultaneously throughout the region, thereby avoiding capital and investment flight from one economy to another. However, the November 1998 APEC only went part of the way to forging this new cooperative agenda. The countries of APEC did agree to create a new 'cooperative growth strategy' and in a joint declaration they stated: 'We are resolved to work together to support an early and sustained recovery in the region, to contain the risks of contagion and prevent the possibility of a global recession.' (Richardson 1998, p1). APEC hoped 'to ease the burden of debt on companies and banks, strengthen financial systems, revive investment and growth, and cushion the impact of recession on millions of people' (Richardson 1998, p1). However, the exact details of this plan, and its sources of funding, were not outlined, perhaps because of a rift within the APEC organisation. Malaysia, China and some other countries argued for the need to regulate short-term speculative capital flows, a move not supported by the U.S., Japan, or South Korea. President Jiang Zemin of China put this case most strongly: 'Those big powers with influence on international finances are duty-bound to take effective measures to improve the supervision and regulation of the flow of international financial capital, contain overspeculation of international hot money and enhance the capability for the forecast and prevention of financial risks and for their relief.' (Richardson 1998, p14). A task force was to be set up to implement the general agenda outlined by the 1998 meeting, but it is clear that much more needs to be done to meet the objectives outlined by APEC.

The APEC meeting in New Zealand in September 1999 continued the policies outlines in 1998. The leader's declaration at time committed the region both to more open trade and to enhanced good governance, including: -

providing greater transparency and predicability in corporate and public sectorgovernance enhancing the role of competition to improve efficiency and broaden participation by enterprises improving the quality of regulation and the capacity of regulators to design and implement policies for sustainable growth, reducing compliance costs and facilitating business growth building a favourable regional and international environment for free and fair competition.(15) In many ways, more important 'deals' were done outside the main conference agenda. Considerable international consensus was reached on the idea that some kind of UN involvement in East Timor would be required. Likewise, the U.S. and China at long last reached some fundament agreement on the PRC's future membership in the WTO (Stevenson 1999).

In the November 2000 meeting in Brunei, the APEC group was concerned about maintaining growth in the world economy, and about the impact of globalisation (Skanderup 2000). Though still promoting trade liberalisation, the APEC statement was rather general and thin on detailed agendas. Some countries, including South Korea and Japan, were keen to rectify the imbalance of information and Internet access in the developing countries of the Asia-Pacific region (Skanderup 2000).

In general, these trends have indicated a serious shift in Australian policy away from bilateralism to multilateralism, from the West towards Asia, and from the high diplomacy of geo-politics to the 'low-politics' of economics and culture. This trend indicates how far Australia has moved from a client state to an independent player in the East Asian region. APEC emerges as a 'qualified success story', and a credit to the diplomatic good will of all the nations involved. Its continuing success, however, should not be assumed (see Oxley 1999). However, the resilience and effectiveness of APEC will be seriously tested through 2001-2002.

4. A Suitable Foreign Policy for a Middle Power?

We have seen that Australian foreign policy has become extremely active since the mid-1970s and realigned itself to new realities in world affairs. Key areas of foreign policy include: -

The question we can ask, however, is whether Australia has been able to balance its efforts at being a 'good international citizen' with its pragmatic self-interest. Australia, for example, has rarely allowed its trade to be blocked for long by concerns over human rights. Likewise, it can be seen that this foreign policy agenda is very ambitious. Does Australia, as a middle-rank power, have the resources, talent and international prestige to effectively pursue all these policies? At the very least, Australia will need to devote more resources to its international relations and develop more skills in its population if it wishes to maintain a positive presence in global affairs.
 
 

5. Bibliography and Further Resources

Footnotes

1. "The Commonwealth and the World", [Internet Access at http://rcscanada.org/branch1/history.html].

2. "Australia May Let US Store Arms During Crisis", Straits Times, 25 May 1996 [Interactive Internet Access].

3. "Tandem Thrust Webpage", Directorate of Public Relations, Department of Defence, Canberra, 1997 [Internet Access].

4. Though this dispute will continue, Okinawa Governor Masahide Ota aims to clear the island of foreign bases by 2015, "US Base Plans Set to Return Land to Okinawans", Jane's Defence Weekly, 24 April 1996, p10.

5. "Call for Japan-US Defence Pact to Cover Asia-Pacific", Straits Times, 22 April 1996, [Interactive Internet Access].

6. "Japanese Polled Not Keen on Larger Military Role", Straits Times, 24 April 1996, [Interactive Internet Access].

7. AUSAID Australia's Aid Program: Memorandum for the DAC Peer Review, Canberra, AusAid, 1999

8. DOWNER, Alexander "Australia Provides More Help for East Timor's Reconstruction", Media Release AA 80, December 1999 [AusAid Webpage at http://www.ausaid.gov.au/media/release/aa180.html].

9 For more detail see "APEC: A Quick Guide", Internet access via DFAT Homepage - APEC 1999.

10. "Saving Face", The Economist, 19 November 1994, p30.

11. "Saving Face", The Economist, 19 November 1994, p30; "The Opening of Asia", The Economist, 12 November 1994, p22.

12. "China to Cut 30% Off Import Tariffs", Gold Coast Bulletin, 20 November 1995, p17; see also Santamaria 1995.

13. Contra "A Dream of Free Trade", The Economist, 19-11-94, p29. For Prime Minister Mahathir's concerns of over-institutionalisation of APEC, see Stewart 1995.

14. "The Opening of Asia", The Economist, 12-11-94, p22; Bergsten 1994, p26.

15. "APEC Economic Leader's Declaration, Auckland, New Zealand, 13 September 1999", APEC 1999 Website [Internet Access at http://www.apec.govt.nz/n/index.htm].

Resources

A range of useful publications and links will be found at the Australian Department of Foreign Affairs and Trade Homepage, at http://www.dfat.gov.au

The Parliamentary Library of Australia has a wide range of useful Research Papers, Reports and Links on Foreign Affairs, Defence and Trade at http://www.aph.gov.au/library/intguide/fad/index.htm

Voluntary Further Reading

Good places to start on foreign policy are: -

EVANS, Gareth & GRANT, Bruce Australia's Foreign Relations, Melbourne, Melbourne University Press, 1995

FIRTH, Stewart Australia in International Politics: An Introduction to Australian Foreign Policy, Sydney, Allen & Unwin, 1999

SMITH, Gary et al. Australia in the World: An Introduction to Australian Foreign Policy, Melbourne, Melbourne University Press, 1996

WOLPE, Bruce C. "Australia and America: Renewal and Reinvention", Australian Journal of International Affairs, 54 no. 1, April 2000, pp11-14 (Vertical File)

References

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ALATAS, Syed Farid "Asia May Re-assert Own Cultural Values", NST, 30 May 1995, p12

AUSAID Australia's Aid Program: Memorandum for the DAC Peer Review, Canberra, AusAid, 1999

BALL, Desmond & KERR, Pauline Presumptive Engagement: Australia's Asia-Pacific: Security Policy in the 1990s, St. Leonards, Allen & Unwin, 1996

BATINO, Clarissa S. "APEC To Lead Global Trade Liberalization", BW Online, February 20, 1996 [Internet Access]

BERGSTEN, C. Fred "APEC and World Trade: A Force for Worldwide Liberalization", Foreign Affairs, 73 no. 3, May/June 1994, pp20-26

BLAINEY, Geoffrey A Shorter History of Australia, Heinemann Australia, Melbourne, 1994

BODDE, William Jr. View from the 19th Floor: Reflections of the First APEC Executive Director, ISEAS series on APEC no. 1, Singapore, ISEAS, 1995

BODDE, William Jr. "An important Step for Global Stability", Straits Times Interactive, 5 December 1997 [Internet Access]

CLARKE, Jonathan "APEC as a Semi-Solution", Orbis, 39 no. 1, Winter 1995, pp81-95

COTTON, James "'Peacekeeping' in East Timor: An Australian Policy Departure", Australian Journal of International Affairs, 53 no. 3, November 1999, pp237-247

COTTRELL, Alison & MAKKAI, Toni "Australian Perceptions of Indonesia as a Threat", Asian Studies Review, 19 no. 2, November 1995, pp59-71

DEPARTMENT OF FOREIGN AFFAIRS AND TRADE (Australia) In the National Interest: Australia's Foreign and Trade Policy: White Paper, Canberra, Commonwealth of Australia, 1997

DOBBS-HIGGINSON, M.S. Asia Pacific: Its Role in the New World Disorder, Port Melbourne, William Heinemann, 1993

DOWNER, Alexander "Australia and the United States : Old Friends and New Priorities: Speech by the Hon Alexander Downer MP, Minister for Foreign Affairs, to the American Chamber of Commerce", DFAT Document, Sydney, 5 August 1999 [Internet Access]
 
 

EVANS, Gareth & GRANT, Bruce Australia's Foreign Relations, Melbourne, Melbourne University Press, 1995

FERGUSON, R. James "Positive-Sum Games in the Asia-Pacific Region", The Culture Mandala, 1 no. 2, September 1995, pp35-58

GARRAN, Robert "Mahathir Launches East Asia Grouping", Australian, 6 February 1996, p14

EVANS, Gareth & GRANT, Bruce Australia's Foreign Relations, Melbourne, Melbourne University Press, 1995

GREENLEES, Don "Downer's Asian Debut", Australian, 15 April 1996, p15

HARDING, Harry "Wanted: Asian-US Cooperation", The Straits Times, 22 October 1998, p32

HITCHCOK, David I. Asian Values and the United States: How Much Conflict?, Washington, The Center for Strategic and International Studies, 1994

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Johnson, Chalmers "The Empowerment of Asia", unpublished lecture paper, 1994a

JOHNSON, Chalmers "To the End of the Japanese American Alliance", Public Seminar, University Of Queensland, 17 November 1994b

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MACRIDIS, Roy C. (ed.), Foreign Policy in World Politics, 8th edn, Prentice Hall, New Jersey, 1992

MADDOCK, Rodney "Trade and Trade Blocks: NAFTA, APEC and the Rest", Arena, no. 4, 1994/5, pp31-40

MALIK, J. Mohan "Patterns of Conflict and the Security Environment in the Asia-Pacific Region: the Post - Cold War Era", in MALIK, J. Mohan et al. Asian Defence Policies: Great Powers and Regional Powers (Book I), Geelong, Deakin University Press, 1992, pp33-52

McCAWLEY, Peter "Australia and the Economic Boom In Asia", The Sydney Papers, 7 no. 2, Autumn 1995, pp104-114

McGREGOR, Richard "Empowered APEC Creates New Stability", Australian, 21 November 1994, p15

MOOSA, Eugene "Steering Clear of Military Matters", South China Morning Post, 16 November 1995

OXLEY, Alan "APEC - The Next Ten Years", Australian APEC Study Centre, Issues Paper 16, May 1999 [Internet Access via http://www.arts.monash.edu.au/ausapec/publications.html]

RICHARDSON, Michael "APEC Reaches Broad Pact: Members Vow Cooperation But Stumble on Details", International Herald Tribune, 19 November 1998, p1, p14

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SANTAMARIA, B.A. "Politics in Context", Weekend Australian, 18-19 November, 1995, p26

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SHERIDAN, Greg (ed.) Living With Dragons: Australia Confronts its Asian Destiny, Sydney, Allen & Unwin, 1995

SKANDERUP, Jane "Brunei 2000: Accomplishments, Stasis, and the Strategic Wisdom of APEC", PacNet Newsletter, no. 47, November 2000

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WOLPE, Bruce C. "Australia and America: Renewal and Reinvention", Australian Journal of International Affairs, 54 no. 1, April 2000, pp11-14

Copyright R. James Ferguson 2000, 2001
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