Once were worriers – Australia’s Asian engagement since Federation



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Tim Harcourt is the JW Nevile Fellow in Economics at UNSW Sydney and host of The Airport Economist on Sky News Business Channel and Qantas www.theairporteconomist 

He is a member of the CEDA Council on Economic Policy (CCEP). This is an exclusive preview of his next book The Power of Proximity: Australia and the Asian Century (New South). 
 

Tim Harcourt examines Australia-Asia trade relations throughout history, from the barter system in pre-colonial times to the current era of massive movements of goods, services and people. 

Tim Harcourt | 12/11/2017 | 0 Comments


Australia’s attitude towards Asia was often based on fear. Although our first trade ties occurred in indigenous times when Trepang (sea cucumber) traders visited from Makassar (now Sulawesi in modern Indonesia) to Arnhem Land, from European settlement onwards, Asia was somewhere to fear, and a matter of defence and immigration policy more than trade and commerce. Even the fact that international commerce saved the convict colony of New South Wales, and the success of Chinese immigrants in the gold rushes (in developing a retail sector in Australia that many took back to China) didn’t stop an anti-Asia push at the time of Federation in 1901, restricting trade, immigration and setting up a defence policy that feared our neighbours to the North (particularly after Japan’s defeat of Russia in 1904). 

There were early forays of trade into Asia. The colonies (now states) tried a few trade missions to ‘the East’ in the 19th century and in the early 20th century Australia set up a Trade Commissioner in Shanghai in the 1920s and Tokyo in the 1930s (despite objections from the British Foreign Office) and even in Batavia (now Jakarta) in the Dutch East Indies (now known as Indonesia). But war, depression and war again put a stop to this Asian engagement (as did British interests trying to curb Australia’s trade with Japan for instance) and it was not until the post war period that Australia’s trade adventure with Asia began with some momentum. 

What were the turning points or ‘waves’ of engagement?

Firstly, you would have to start with the Commercial agreement with Japan in 1957, now 60 years old, forged by Country Party Trade Minister and later Deputy Prime Minister ‘Black Jack’ McEwen and Japanese Prime Minister and Foreign Minister Nobusuke Kishi – the grandfather of present Japanese PM Shinzo Abe. The agreement gave Australia a beach head into the Asian century, allowed Japan to join the multilateral system after the horrors of World War 2 and by 1966, Japan had overtaken the UK as our number one export destination. 

Secondly, on the other side of politics, Gough Whitlam’s recognition of China mattered significantly. First the visit as Opposition Leader in 1971 (much criticised at the time until it was realised that the US was doing the same thing under Richard Nixon and Henry Kissinger) and then in 1973 when Whitlam was the first Labor Prime Minister since the Communist Revolution in China in 1949. Both sides of politics now regard the China relationship as vital to Australia’s continued economic prosperity. 

Thirdly, credit must be given to the Hawke-Keating Government reforms of the 1980s and 1990s, that opened up the Australian economy, by floating the exchange rate, reducing tariffs and setting up new regional institutions like APEC and actively engaging in the region (for example Gareth Evans’s peace negotiations in Cambodia). 

Finally, in 1997-99, the Howard-Costello Government and the Reserve Bank of Australia kept their nerve during the Asian Financial Crisis, by acting cooperatively to offer financial assistance and not withdrawing from the region. Similarly, the Rudd Government held firm in the Global Financial Crisis of 2008, helped by stimulus packages in China and ASEAN (particularly Thailand) and domestically getting Australia through without a major loss of employment. 

Along with these economic reforms Australia benefited in education policy from the Colombo Plan, which enabled Asian students to study on Australian campuses (many of whom returned to be important statesmen and women in their home countries) and from a change in immigration policy. Gough Whitlam and South Australian Premier Don Dunstan fought to end the White Australia Policy in the ALP, and Harold Holt played a similar role on the Liberal side. Malcolm Fraser continued the Whitlam immigration stance, and increased the refugee intake, while Bob Hawke saw the development as a multicultural society under his Government as going hand in hand with his economic agenda. After all Gough Whitlam had once said: “The White Australia Policy, championed as much by the labour movement as anyone else, crippled our credibility in Asia for a century.”

Now in 2017, Australia is well and truly enmeshed in the Asian century. We are an export orientated, trading nation with strong flows in people, whether it be education, tourism or immigration from the vast region of Asia. There are challenges in dealing with the geopolitical issues like North Korea, the South China Sea and the protectionist impulses of President Donald Trump, but Australia increasingly sees Asia as an economic partner, not a threat; as former Prime Minister Paul Keating once said, a place we get security in, not from. In 1966, Geoffrey Blainey wrote that Australia’s history was shaped by ‘The Tyranny of Distance’ yet that very year, Japan had overtaken the UK as our major export partner. Even as ‘The Tyranny of Distance’ was being written, ‘The Power of Proximity’ was beginning to take shape as Australia began to find its economic place in the Asian century.

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