Key issue
Australia and Japan are key economic and strategic partners. A range of partnership agreements, as well as growing trade and investment, have seen Australia- Japan economic links prosper. Security cooperation in response to an assertive China has also grown, particularly through both countries’ participation in the Quad arrangement and increased coordination between the defence forces of the 2 countries. Collaboration in new energy sectors appears likely to bolster relations.
Introduction
Japan is the world’s third largest economy, as well
as Australia’s second largest source of foreign investment and third largest
trading partner. The 2 countries are currently actively developing a deeper
relationship in diverse spheres.
Australia and Japan’s post-Second World War relationship began with
the re-establishment of diplomatic relations in 1952. This was followed closely
by the promotion of a stronger trading relationship through the 1957 Commerce Agreement. Relations in other aspects
were subsequently strengthened through the 2007 Joint Declaration on Security Cooperation, the Special Strategic Partnership announced in 2014 and the 2015
Japan- Australia Economic Partnership Agreement (JAEPA).
Strategic collaboration
In 2022, Australia and Japan signed a defence cooperation agreement
against the backdrop of China's growing military and economic might. This Reciprocal Access Agreement, Japan’s first with
any country, will allow the Australian and Japanese militaries to work jointly on
defence and humanitarian operations. Other key documents on the Australia-Japan
relationship are available on the Department
of Foreign Affairs and Trade website.
While the Japan-US alliance is the cornerstone of
Japan’s national security, the Indo-Pacific region is a key focus for Japan’s
foreign policy and, since 2017, Japan has been promoting a ‘Free and open
Indo-Pacific strategy’. This orientation aligns closely with Australia’s own perceptions
of and strategies in the region. Both countries view the Southeast Asian
bloc of ASEAN as central to the Indo-Pacific region, and both actively partner
with the countries of Southeast Asia in areas including trade, investment, aid,
defence and technology. Similar to Australia, Japan has a strong diplomatic presence
in the Pacific, and engages at a leaders level through the Pacific Islands
Leaders Meeting (PALM).
The 2007
Joint Declaration on Security Cooperation provides the basis for extensive
cooperation on security issues between Australia and Japan, including in law
enforcement，border security, counter-terrorism activities, disarmament, counter-proliferation,
peace operations, maritime and aviation security, and humanitarian relief
operations. An Information
Security Agreement on the sharing of classified information entered into
force in March 2013 and Japanese
and Australian forces have worked together in defence operations in Iraq,
East Timor, South Sudan and Pakistan. Japan
and New Zealand are also currently engaged in discussions to enable eventual
sharing of classified information.
Both countries belong, together with the US and
India, to the Quadrilateral Security Dialogue –
a non-binding security grouping that has been strengthening its bonds since
2020. Quad foreign ministers meet regularly, and leaders
met in person for the first time in September 2021. Attendance at the Quad Summit in Tokyo was Prime Minister Anthony Albanese and Foreign Minister Penny Wong’s first
official engagement following the 2022 federal election. Both Australia and
Japan have agreed to join the US’s new Indo-Pacific Economic Framework, a direct response to
China’s regional challenges.
Today, Japan is Australia’s closest partner in
Asia, and Japan describes Australia as its most important security partner
after the US, a common ally of both countries. The Ninth
Japan- Australia 2+2 Foreign and Defence Ministerial Consultations were held
in June 2021.
The respective defence forces are increasing joint
training and strengthening interoperability. Joint exercises include the annual Southern
Jackaroo exercise and the Nichi
Gou Trident exercise. Further areas of potential military cooperation
between Australia and Japan to respond to China’s
grey-zone activities in both the East China Sea region and the South China
Sea are being explored.
Economic relationship
Japan was Australia’s third-largest trading partner
in 2020, with 2-way goods and services trade valued at A$66.3
billion. In 2020, Australia’s major merchandise exports to Japan were
natural resources, including gas, coal, iron ore, copper and aluminium. From
Japan, Australia imports vehicles, refined petroleum, machinery and tyres. More
recently, Japanese
investment into Australia has been expanding into renewables; financial
services; infrastructure; information and communications technology; property;
food; and agribusiness.
Japanese investment continues to play a significant
role in the development of the Australian economy. The 2021 investment scenario
for Japanese investment in Australia is detailed in Japan- Australia investment report 2021: the year of partnerships.
In the same year, the stock of Australian investment in Japan was valued at A$112 billion.
Further development in the investment area was
discussed in the third Ministerial Economic Dialogue between the 2 countries, held in July 2021. Key in these
negotiations were discussions on supply chain resilience, regional infrastructure
and efforts to achieve the Paris Agreement climate action goals.
Both Australia and Japan have joined the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) and the Regional
Comprehensive Economic Partnership (RCEP).
Multilateral connections
Other spheres of cooperation between Australia and
Japan include a Strategy
for Cooperation in the Pacific (2016), participation (alongside the US) in the Trilateral
Partnership for Infrastructure Investment in the Indo-Pacific (2018), and an Australia- Japan
Foundation Strategic Plan (2017–22) intended to ‘advance Australia's
engagement with Japan through people-to-people linkages’ and to ‘strengthen
increasingly sophisticated engagement between Australia and Japan that reflects
a mutual awareness of the vital importance of Australia and Japan to each
other's foreign, economic, trade, security and cultural policies’. The 2 countries
also jointly participate in regional and multilateral forums such as Asia
Pacific Economic Cooperation (APEC), the East Asia Summit (EAS) and the G20.
It is in the technology sphere where
Australia- Japan relations are today being swiftly developed, and aspects of
this involve all members of the Quad. The Quad Critical and
Emerging Technology Working Group was established in March 2021 to pursue
an ‘open,
accessible, and secure technology ecosystem’, reflecting ‘the
recognition of Quad leaders that a free, open, inclusive and resilient
Indo-Pacific requires critical and emerging technology be governed and operate
according to shared interests and values’. The potential
for AI collaboration between the Quad countries is also being
explored. As time progresses, the Quad relationship looks likely to play a much
greater role in the new techno-diplomacy, including in the quantum sphere. The U.S- Japan Technology Security Alliance may also
include Australia in future, and some scholars are advocating a broader Indo-Pacific technology partnership.
Regional infrastructure assistance is another area where Australia
and Japan have come together. The Blue Dot Network, launched by the US,
Japan, and Australia in 2019 in response to China’s Belt and
Road Initiative, provides assessment and certification of regional infrastructure
projects ‘as a multilateral effort to promote principles of sustainable
infrastructure development around the world’ and to ‘serve as a globally
recognized symbol of market-driven, transparent, Paris Agreement-aligned, and
financially, socially, and environmentally sustainable infrastructure projects’. The OECD (Organisation for Economic Co-operation and Development) has now involved itself in the initiative.
New energy links
Energy – as the driver of all economic activity – is another area
where the Australia-Japan relationship is strengthening. The Indo-Pacific Clean Energy Supply Chain Forum was
held earlier this year in Sydney. At their May 2022 meeting in Tokyo the Quad
leaders also stressed the importance of common energy supply chains and the significance
of ‘clean energy cooperation’ in ‘clean hydrogen’.
Prior to the Quad meeting, Japan and Australia had already been
cooperating in the field of hydrogen. On 9 April this year, a group of Japanese companies, including Kawasaki
Heavy Industries, J-Power, Iwatani Corporation, Marubeni Corporation, and Sumitomo
Corporation, together with Australia’s AGL Energy, held a ceremony to celebrate their success in a pilot project to transport hydrogen from Australia to Japan by the
world’s first liquefied hydrogen tanker Suiso Frontier. The cargo had been generated from Victorian coal.
This project has some history. The Japanese Government announced its Basic hydrogen strategy in 2017 as a part of
its energy security policies and emissions goals. Since then, Australia and
Japan have been exploring bilateral renewable energy cooperation. Agreements in
this area include the 2018 Hydrogen Energy Supply Chain Pilot Project between
the Commonwealth and Victoria, the 2019 Memorandum of Cooperation on Energy and Minerals,
the Joint Statement on Cooperation on Hydrogen and Fuel Cells in January 2020 and a Partnership on Decarbonisation through Technology in June 2021.
In January 2022, the Australia- Japan Clean Hydrogen Trade Partnership was announced by the Australian Government, stressing that ‘clean hydrogen is
central to both Australia’s and Japan’s plans to achieve net zero emissions
while growing our economies and jobs’ and ‘establishing clean hydrogen supply
chains will facilitate investment into Australia and will create jobs for
Australians, many in our regional areas’.
Japanese scholar Akimoto Daisuke has suggested that
a ‘quasi-alliance’ between Japan and Australia in energy
security cooperation, especially clean hydrogen energy, holds great economic
potential, as does the possibility of developing a hydrogen supply chain
network in the Indo-Pacific.
While there are still many unknowns regarding how
‘clean’ hydrogen energy is, the potential for the generation and transport of
‘green hydrogen’, and the overall economics of hydrogen energy, it appears that
this area will grow into a key aspect of Australia’s ongoing and deepening relations
with Japan.
Further reading
Australian Government, ‘Japan’, Department of Foreign Affairs.
Herbert Smith Freehills, Japan- Australia Investment Report 2021: the Year of Partnerships, (March 2022).
Japanese Government, ‘Japan- Australia relations’, Ministry of Foreign Affairs.
Japanese Government, Diplomatic Bluebook 2021: Japanese Diplomacy and International Situation in 2020, (Japan: Ministry of Foreign Affairs, 16 December 2021).
Shiro Armstrong, Reimagining the Japan Relationship: an Agenda for Australia’s Benchmark Partnership in Asia, (Canberra: Australia-Japan Research Centre, The Australian National University, November 2021).