Australia's Foreign Economic Policy and ASEAN

1. Introduction

1 Introduction Australia’s foreign economic policy1 has experienced a great deal of change since the early 1980s. So too has its policy towards the Association of Southeast Asian Nations (ASEAN). In the 1970s, Australia continued to reject ASEAN’s demand for better access by its members for industrial exports to the Australian market. By the end of the 1980s, the Australian Government saw ASEAN as an integral part of an Asia-Pacific regional architecture, which was based on the concept of multilateral free and open trade and investment, and tried to work with ASEAN for that cause well into the 1990s. Since the start of the new century, Australia has been more inclined to give priority to bilateral relations with members rather than ASEAN as a whole, a move illustrated by the establishment of bilateral free trade agreements (FTAs) with some individual ASEAN members. This book focuses on the development of Australia’s foreign economic policy towards ASEAN and its members and tries to explain why it shifted as it did. It argues that the shifts in Australia’s ASEAN policy have not only closely reflected the changes in Australia’s overall foreign economic policy orientation since the 1980s, but that at times Australia’s ASEAN policy strongly drove the change. The development of Australia–ASEAN relations illustrates the importance of the shifts in 01฀AFEP&A.indd฀฀฀1 12/15/09฀฀฀3:00:57฀PM 2฀ Australia’s฀ Foreign฀ Economic฀ Policy฀ and฀ ASEAN Australia’s policy in sharp relief, as ASEAN has been a critical external actor in shaping the dynamics of Australia’s foreign economic policy. Australia’s foreign economic policy, in turn, has been an important factor in explaining the development of economic cooperation in the Asia-Pacific region since the 1980s. For instance, Australia’s regional economic cooperation initiative in the late 1980s culminated in the establishment of the Asia-Pacific Economic Cooperation (APEC) forum, which involves major countries on both sides of the Pacific. In creating APEC, Australia’s initiative towards ASEAN and ASEAN’s support for it were crucial. In recent years, while the “East Asian” economic integration has gained momentum following the 1997 Asian financial crisis (hereafter referred to the “Asian financial crisis”), Australia, whose inclusion in the regional integration process has remained ambiguous, has opted to negotiate bilateral FTAs to pursue its concrete economic interests. This bilateralist foreign economic policy, nevertheless, has not hindered Australia’s regional engagement. Rather, it has bestowed unexpected consequences such as the commencement of negotiations for the ASEAN–Australia–New Zealand FTA (2005) and Australia’s participation in the East Asia Summit (2005). An analysis on Australia’s foreign economic policy related to ASEAN and Australia–ASEAN relations provides a prominent vantage point for reviewing the prospect of “inclusive” economic integration in the East Asian region. Through a study of the development of Australia’s policy towards ASEAN, it is suggested that there are three crucial factors that define the shift in Australia’s foreign economic policy direction: • the relative shift in the perception of national interests away from the political/security issues towards greater emphasis on economic issues; • the emergence of ASEAN as an important part of the architecture for political-economic cooperation in the Asia-Pacific region, and; • the gradual development of ASEAN and East Asian regionalism and Australia’s stance on how it should relate to this development. These factors have induced changes in Australia’s foreign economic policy goals and preferences, and domestic policy institutions. Changes in Australia’s foreign economic policy towards ASEAN and its members have tended to be explained as natural consequences of the 01฀AFEP&A.indd฀฀฀2 12/15/09฀฀฀3:00:58฀PM Introduction฀ 3 shifts in Australia’s overall foreign economic policy orientation. There is literature on Australia’s involvement in multilateral trade regimes such as the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO),2 and in economic development and cooperation in the Asia-Pacific region,3 which, in varying degrees, touches upon Australia’s policy towards and its relations with ASEAN and its members. While this literature helps explain one aspect of Australia’s policy towards ASEAN and its changes, it does not touch upon whether or how Australia’s ASEAN policy drove the shifts in its overall foreign economic policy orientation at key junctures. Moreover, since the late 1980s when “engagement with Asia” became...