Annual Report 2003-2004

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Your location: Performance > Outcome 1 > Output 1.1 > 1.1.1 North Asia

OUTPUT 1.1: Protection and advocacy of Australia's international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.1 North Asia

On this page: Overview :: Japan :: China :: Republic of Korea (ROK) :: Democratic People's Republic of Korea (DPRK) :: Economic relationships in North Asia


The department worked to strengthen cooperation and dialogue with North Asian countries and promote Australia's economic, political and strategic objectives in the region.

The department's efforts to expand bilateral economic ties with Japan, China and the Republic of Korea (ROK) have taken high priority and resulted in the signing of Framework Agreements with China and Japan. This means greater opportunities for Australian companies and consolidates Australia's overall economic position in the region.

North Asia is a region of great strategic—as well as economic—importance to Australia. The department's consultation and cooperation with China, Japan, the ROK, and the Democratic Peoples Republic of Korea (DPRK), contributed to regional strategic imperatives of maintaining stability on the Korean peninsula and across the Taiwan Strait. We contributed to international efforts to bring about a nuclear weapon-free Korean peninsula—a key international security objective—through ongoing bilateral and multilateral efforts to persuade the DPRK to abandon its nuclear weapons programs.

The department continued to fortify the bilateral relationship with Japan. Our common security interests underpinned close cooperation on counter-terrorism, counter-proliferation and defence exchange. Trade and economic relations remained strong and were positioned to expand with the establishment of the Trade and Economic Framework.

Australia's national economic and strategic interests were well-served by the strengthening of our bilateral relationship with China which, despite internal difficulties, continued to grow in importance in both economic and strategic terms. Following the challenges of the Severe Acute Respiratory Syndrome (SARS) crisis in the previous year, there was a vibrant exchange of visits including at the most senior levels in 2003–04. Chinese President Hu Jintao's visit to Australia in October 2003 illustrated the unprecedented strength of the bilateral relationship. The economic relationship expanded through the signing of a Trade and Economic Framework, and agreement on a joint feasibility study towards a possible bilateral free trade agreement (FTA), expected to be completed in the first half of 2005.


The department's efforts to advance core aspects of Australia's security, trade and economic and people-to-people links with Japan produced a number of significant outcomes. The result will be stronger bilateral relations and advances in Australia's national security and economic interests.

High-level contact and exchange continued to be a major feature of the relationship, highlighted by the Prime Minister's visit to Japan in July 2003, which was supported by the department. The major outcomes of the visit were:

The department worked closely with stakeholders to implement the Trade and Economic Framework through a joint working group, established in December 2003. A draft study, due by July 2005, will examine the effect of the framework's trade and investment liberalisation provisions. The framework's business-facilitation agenda includes commercial and policy links in 11 sectors. We supported the signing of instruments in five of these areas—energy and minerals cooperation; customs cooperation; mutual recognition of engineer qualifications; investment promotion; and information economy and information and communications technology industry cooperation.

The department continued its leading role in implementing follow-up action to the second Australia–Japan Conference (a process initiated by the Prime Minister and then-Prime Minister Obuchi). A number of positive developments linked to the conference should deepen and broaden bilateral dialogue and cooperation. They include:


The department focused on building more ambitious economic ties with China, highlighted by the conclusion of a Trade and Economic Framework and agreement to launch a feasibility study on a possible free trade agreement.

The department provided support for Chinese President Hu Jintao's visit to Australia in October 2003. The visit marked a new high in the relationship. Australia was one of the first countries President Hu visited after his inauguration in early 2003, indicating the strong relations Australia had already forged with the new leadership in China, including through the Prime Minister's visit in August 2003. It also reflected the importance China places on bilateral ties with Australia.

During President Hu's visit, Mr Downer and Mr Vaile held productive discussions with Chinese Foreign Minister, Mr Li Zhaoxing, and National Development and Reform Commission Chairman, Mr Ma Kai. Ministers presided over the signing of several bilateral agreements during the visit, including:

The conclusion of the Trade and Economic Framework with China was a significant achievement. It sets the agenda for strengthening economic and trade relations over the next decade.

The department supported the visit to Australia by Politburo member and Minister of the Communist Party of China Publicity Department, Liu Yunshan, in September 2003. Mr Liu's visit deepened links with China's senior leadership. It allowed us to advance Australian media interests in China and introduce Mr Liu to Australian expertise in the area.

In November 2003, the department established the China FTA Study Taskforce to take forward the joint government FTA feasibility study. Mechanisms include consultations with government agencies, state and territory governments, industry groups, businesses and other stakeholders. We sought public submissions on the study by June 2004. Preliminary progress was made through regular meetings of senior officials and a joint working group on the feasibility study.

The department promoted expansion of Australia's strategic partnership with China in energy and resources. It supported Mr Vaile's visit to China in April 2004 in which he promoted Australian LNG suppliers' efforts to win further multi-billion dollar supply contracts. State ministers and Australian business representatives participated in the visit. At the tenth Joint Ministerial Economic Commission in April 2004, the two sides agreed to improve market access opportunities and to cooperate more closely on regional and global trade liberalisation and facilitation issues.

The department's engagement with China on strategic issues contributed to regional and global efforts towards stability. We underlined the importance of China maintaining a constructive and active role in six-party talks on the DPRK nuclear issue and for continued international cooperation on this and other strategic issues. We held discussions with China on key security matters such as counter-terrorism and the proliferation of weapons of mass destruction (WMD) at bilateral regional security talks, held in March 2004 in Beijing. We closely monitored events surrounding the Taiwan 'presidential' election—notably in relation to implications for Australian interests—and played an active role in urging both sides to exercise restraint. This contributed to international efforts to reduce the risk of misunderstanding, which could lead to heightened tensions across the Taiwan Strait.

Our human rights advocacy in China included representations through the embassy in Beijing and during visits. We also engaged China in frank and constructive discussions at the seventh annual bilateral Human Rights Dialogue, held in Beijing in July 2003. China's greater openness was reflected in two ways: in its convening of a joint press conference on the dialogue, and by the Chinese side arranging for the Australian delegation to travel to Tibet to raise human rights concerns directly with local authorities there (see sub-output 1.1.7 for further information).

Photo - See caption below for description
Minister for Trade, Mr Mark Vaile, and Republic of Korea Trade Minister, Mr Hwang Doo-yun, answer media questions after the third Australia–Korea Ministerial Joint Trade and Economic Commission meeting on the Gold Coast in September 2003.
Enlarge image :: Photo gallery

Republic of Korea (ROK)

The Prime Minister's visit to Seoul in July 2003—supported by the department—provided an opportunity to reaffirm Australia's strong commitment to the bilateral relationship and our concern to bring about a nuclear weapon-free Korean peninsula.

The Prime Minister and ROK President Roh agreed to expand bilateral economic and trade cooperation and maintain bilateral cooperation on finding a peaceful resolution to the DPRK nuclear issue. The Prime Minister promoted Australia as a reliable and secure LNG supplier to meet the ROK's long-term needs.

The department strengthened our practical and mutually beneficial links with the ROK, particularly through support for Mr Vaile in hosting the Third Ministerial Joint Trade and Economic Commission (MJTEC 3) in September 2003 with ROK Minister for Trade Mr Hwang Doo-yun. Discussions moved beyond a checklist of bilateral market-access issues. The focus was on policy-oriented dialogue on key global and regional economic and trade issues, and the future of the bilateral economic relationship. Ministers exchanged perspectives on existing and emerging trade complementarities, domestic economic reform agenda, and the 'new industries' of information technology and communications, biotechnology and services.

Though the ROK's protection of its agricultural sector continued to prevent a comprehensive FTA with Australia, ROK officials at MJTEC 3 noted the will that existed on both sides to ensure our bilateral trade and economic links develop to their full potential.

Senior department officials met their counterparts on six separate occasions in Seoul and Canberra. These meetings helped consolidate bilateral cooperation on political, military and nuclear policy issues, including Iraq, WMD proliferation, human rights, counter-terrorism and regional economic and legal developments.

The department worked closely with the ROK in 2004 to shape the APEC agenda in anticipation of the ROK's year as APEC host in 2005. In May 2004 we held the first round of negotiations with the ROK regarding the further opening of its rice market. Under WTO rules the ROK is required to finalise negotiations by the end of 2004 if it wishes to retain limits on the quantity of rice it imports.

Democratic People's Republic of Korea (DPRK)

The DPRK's pursuit of nuclear weapons programs, and the resulting threat of instability on the Korean peninsula and in the region more generally, continued to dominate Australia's relations with the DPRK.

Mr Downer had put on hold the development of Australia's relations with the DPRK following its October 2002 admission that it had a uranium enrichment program in breach of its international obligations. The department worked to ensure the DPRK Government understood that bilateral relations could not develop further until the DPRK made progress in dismantling its nuclear weapons programs.

Mr Downer sent a senior officials' delegation to the DPRK in January 2004 to register with the DPRK Government, including Foreign Minister Paek Nam-sun, Australia's continuing concerns over its pursuit of nuclear weapons and other WMD. The DPRK was urged back to the six-party talks on the nuclear issue involving the two Koreas, China, the United States, Japan and Russia. The DPRK Government informed the delegation of its intention to attend the second round of six-party talks, which took place in Beijing in February 2004.

To further encourage the DPRK's continuing engagement in the six-party process, Australia's Ambassador-designate to the DPRK, Dr Alan Thomas, visited Pyongyang in April 2004 to present credentials. The Australian Government had delayed doing this for one year to underline its concern over the nuclear issue.

In addition to direct bilateral dialogue, Australia co-sponsored a resolution carried by the UN Commission on Human Rights in Geneva in April 2004 on the human rights situation in the DPRK. The department also worked closely with regional partners, and supported Mr Downer, at the ASEAN Regional Forum, to ensure the DPRK understood the extent of international concern over its nuclear programs.

We continued to work closely with law enforcement and other government agencies on the investigation of, and legal process covering, the DPRK vessel, the PongSu, which was allegedly involved in trafficking illegal narcotics into Australia in April 2003.

TABLE 5. Australia's trade in goods and services with North Asian economies
 Goods(a) and Services Export Export   Import Import  
Japan 25 790 22 851 3.9% 17 544 18 086 3.9%
Republic of Korea 10 800 8 954 9.0% 5 078 5 168 3.9%
China 9 362 10 104 20.4% 13 734 15 126 19.9%
Hong Kong 4 939 4 110 0.9% 3 202 2 631 4.2%
Taiwan 5 129 4 085 -1.4% 3 482 3 552 2.5%
Other 58 70 43.6% 25 17 5.1%
Total North Asia 56 078 50 174 6.2% 43 065 44 580 7.9%

(a) Goods data is on a recorded trade basis.
Source: DFAT Stars database and ABS International trade in services by partner country 2003.

Economic relationships in North Asia

In addition to our work to implement the Trade and Economic Framework (see page 29) the department worked with industry and other agencies to protect and advance our trade and investment interests in Japan.

In July 2003, Japan announced that it would implement its beef safeguard measure, raising tariffs on fresh and chilled beef to 50 per cent (up from 38.5 per cent). The department supported Mr Vaile and Mr Downer in urging their Japanese counterparts to review the measure. Despite strong international pressure from Australia and other countries Japan did not withdraw the measure.

In a further development in our beef trade, Japan imposed in December 2003 a ban on US beef imports following the detection of a case of BSE in the US herd. US beef accounted for 46 per cent of Japanese imports in 2003. The department worked with industry to respond to Japanese Government and industry requests to overcome shortfalls left by the United States' departure from the market.

We liaised with industry over a Japanese requirement for residue testing of all Australian blueberry exports—imposed following isolated breaches of Japan's regulations of residues. The ban was lifted in December 2003 following a visit to Australia by officials from Japan's Ministry of Health, Labour and Welfare.

The department supported a visit to Japan by Mr Macfarlane, Minister for Industry, Tourism and Resources, and Mr Kevin Foley, Deputy Premier of South Australia, to urge senior representatives of Mitsubishi Motors Corporation to keep their manufacturing base in Australia as part of their corporate revitalisation plan. The company subsequently announced it would continue manufacturing in Australia, although it would reduce its workforce and close its engine plant.

The department continued to support the minerals and resources industry by providing market intelligence on electricity industry developments, monitoring the policy debate on possible introduction of an environment tax and, for the first time, including the private sector in the High Level Group on Minerals and Energy—the principal forum for energy and minerals cooperation between Australia and Japan.

Figure 5. Australia's trade in goods(a) and services with Japan (TEXT DESCRIPTION)

Figure 5. Australia's trade in goods(a) and services with Japan

(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database.

In addition to the Trade and Economic Framework (see page 30), the department supported a number of trade and economic achievements in China. They included:

Figure 6. Australia's trade in goods(a) and services with China (TEXT DESCRIPTION)

Figure 6. Australia's trade in goods(a) and services with China

(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database.

The department pursued a range of market access issues with the ROK and continued to support the expanding bilateral commercial relationship. We supported efforts by the Department of Industry, Tourism and Resources to conclude a bilateral energy treaty by the end of 2004. We also supported the Joint Energy Committee Meeting in Seoul in February 2004.

The department's advocacy supported a number of Australian commercial achievements in the ROK including:

FIGURE 7. Australia's trade in goods(a) and services with the Republic of Korea (TEXT DESCRIPTION)

FIGURE 7. Australia's trade in goods(a) and services with the Republic of Korea

(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database.

In support of Australia's economic interests in Taiwan, the department concentrated on existing and emerging opportunities flowing from Taiwan's accession to the WTO. We were active in facilitating market access in the agriculture sector—a strong traditional market for Australian exports—and in promoting emerging opportunities for legal and educational service providers.

Our representations resulted in quarantine and administrative decisions that cut regulatory difficulties for Australian exporters. This was particularly beneficial for pet food and cut flower exports. Our representations to secure improved intellectual property law in Taiwan were successful—their amended legislation provides strengthened intellectual property protection for Australian business in Taiwan.

The department contributed to the following:

FIGURE 8. Australia's trade in goods(a) and services with Taiwan (TEXT DESCRIPTION)

FIGURE 8. Australia's trade in goods(a) and services with Taiwan

(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database.

We helped Hong Kong-based Australian companies secure significant trade and investment opportunities and take advantage of the upturn in Hong Kong's economy after the easing of the SARS crisis. Our promotion efforts focused on trade in services such as construction and education.

Our most notable achievements during the year included:

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Department of Foreign Affairs and Trade Annual Report 2003–2004
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