Department Foreign Affairs & Trade  
Annual Report - Contents
DFAT Annual Report 1998-99

Interests in North Asia : Sub-program 1.1


The North Asia Division administers this sub-program. The division comprises the North-East Asia Branch, the East Asia Branch, and the East Asia Analytical Unit. Its area of responsibility also covers six overseas posts (Beijing, Guangzhou, Tokyo, Seoul, Shanghai and Hong Kong), as well as the Australia–China Council, the Australia–Japan Foundation and the Australia–Korea Foundation. It also maintains contact with the unofficial Australian Commerce and Industry Office in Taipei.

Table 12 Interests in North Asia (1.1) Resources Summary


1997-98 Actual ($’000)

1998-99 Budget ($’000)

1998-99 Budget and Additional Estimates ($’000)

1998-99 Actual ($’000)



Running costs

56 531

60 104

63 720

57 710

Other program costs

1 459




Total appropriations

57 989

60 216

63 832

57 814

Less adjustments

4 468

4 247

6 366

5 743

Total outlays

53 521

55 569

57 466

52 071

Staff years





n.a.: Not applicable.

Objectives, Performance Indicators and Results


To deliver to the Government advice that promotes Australia’s interests in the region.


The extent to which advice provided on the following issues is delivered in a timely and relevant manner, and addresses Government priorities: domestic political and economic reform in Japan, China and Korea; Japan’s strategic and trade relations with the United States; China’s and Japan’s roles in addressing the East Asian economic downturn; and the Chinese Government’s economic reform program and its management of the social and political ramifications.

Figure 4 Interests in North Asia (1.1) Organisational Chart

Figure 4

The department ensured that ministers were kept closely informed on domestic political and economic reform in Japan, China and Korea through a flow of carefully focused submissions and briefs. Two of the most significant, which reflected extensive departmental input, were the assessments produced by the high-level interdepartmental International Economic Policy Group on the Japanese and Chinese economies. These gave ministers and senior officials a comprehensive assessment of the state of each economy and its immediate prospects. Ministers also noted submissions on Japan’s assistance to the region and on China’s response to the East Asian economic downturn.

Ministers were advised in a timely manner on the implications of Japan’s adoption of revised Defence Cooperation Guidelines with the United States, and on other elements of the US–Japan relationship, including anti-dumping action in the United States against Japanese steel exports. Also, ministers agreed to our submission reviewing bilateral relations with Japan, which recommended, among other things, that strategies be refined to develop greater cooperation with Japan in new areas, including services, e-commerce, information technology and processed food. The Senate Foreign Affairs, Defence and Trade References Committee also expressed appreciation of the department’s submission and testimony to its inquiry into the implications of change in Japan.


The extent to which assessment of developments in North Asian economies assists Australia’s trade objectives.

Australian business and State and Territory governments continued to seek regular consultations with the department to help them make trade and investment decisions, reflecting confidence in the department’s assessments of regional economic developments. These consultations¾ both in Canberra and in capital cities around Australia¾ form the core of the department’s outreach and consultations program on economic and trade developments in North Asia.

We provided timely advice to ministers about the effect on Australia’s export returns of the price and volume reductions for coal and iron ore exports to Japan, following the conclusion of new contracts for the Japanese financial year 1999. We also advised ministers of the opportunities that were present in the Japanese market despite the country’s recession, and of work being undertaken through mechanisms such as the Market Development Task Force to increase non-traditional exports (details in Sub-program 1.6).


To promote and use effective bilateral relations in North Asia to advance Australia’s foreign and trade policy objectives.



The extent to which cooperation is strengthened with Japan on strategic, economic and regional issues, consistent with commitments undertaken in the Australia–Japan Partnership Agenda.

The department’s work in support of visits during the year, as well as extensive talks at the officials’ level, resulted in a greater alignment of views between Australia and Japan on key regional and strategic issues. Two important visits were by the Japanese Foreign Minister, Mr Masahiko Komura, to Australia in November 1998 and by Mr Downer to Japan in April 1999. Exchanges during these visits resulted in heightened Japanese appreciation of Australia’s concerns over developments in East Timor. We also achieved cooperation on responses to the East Asian economic downturn, developments on the Korean peninsula, the US Perry Review of relations with the Democratic People’s Republic of Korea and on the continued importance of the United States’ strategic presence in the region. We were unable, however, to secure Japan’s agreement to cease its unilateral experimental fishing program of southern bluefin tuna, so we moved to seek arbitration under the United Nations Convention on the Law of the Sea.

  • Throughout the year we sought to strengthen Australia’s strategic relationship with Japan through support for regular ministerial and officials’ talks, as well as cultural and professional exchanges. Japan is also Australia's largest trading partner and was the destination for over $17 billion worth of Australian exports in 1998. The photograph shows Mr Downer greeting his Japanese counterpart Mr Masahiko Komura prior to their meeting at the Japanese Ministry of Foreign Affairs’ Iikura Guesthouse in Tokyo during a four-day visit to Japan in April 1999. photo: AP-AAPIMAGE

Departmental officials facilitated the negotiation of a Ministerial Statement on Asia-Pacific Economic Cooperation and World Trade Organization issues, released by Mr Fischer and the Japanese Minister for International Trade and Industry, Mr Kaoru Yosano, during Minister Yosano’s visit to Australia in March 1999. Among other things, this statement reiterated the commitment of both Australia and Japan to the launching of a new round of multilateral trade negotiations and their continuing support for APEC.


The extent to which cooperation is strengthened with China through focused bilateral institutional arrangements and the results of high-level visits.

Australia’s engagement with China has made strong progress in the last year, against a background of increasing prominence and complexity in China’s involvement in international affairs. Our work in support of ministerial visits achieved or progressed key national interests on a range of fronts. For example, after participating in lengthy and complex negotiations, Australia secured, during a visit to China by Mr Fischer, in-principle agreement on bilateral trade issues related to China’s accession to the World Trade Organization. During these visits, we also raised the profile among Chinese leaders of Australia’s credentials for servicing China’s resource needs, particularly in relation to liquified natural gas.

In April 1999, we finalised negotiations with China on ‘approved destination’ status. Australia is now one of only seven officially approved destinations for Chinese tourists, an outcome that will boost export revenues for Australia’s tourism industry.

Our regular dialogue with Chinese ministers and senior officials also enhanced bilateral cooperation on a range of key issues, including illegal migration and transnational crime. The ninth Joint Ministerial Economic Commission meeting held in May 1999 also agreed in principle to the establishment of a bilateral science and technology fund.


The contribution made to heightened awareness of human rights and democracy in China through regular dialogue with the Chinese Government, targeted representations, and support for an effective technical assistance program.

The department played a central role in advancing Australia’s Human Rights Dialogue with China. In August 1998, we led Australia’s participation in the second Human Rights Dialogue with China. The meeting secured widened Chinese participation and more open discussion, and agreed on a Joint Plan of Action including an expanded Human Rights Technical Assistance Program which is overseen by AusAID.

Through our embassy in Beijing, we continued to monitor and report on human rights issues in China and made representations at a senior level about the imprisonment of China Democracy Party leaders as well as about other high-profile human rights issues throughout the year.


The conclusion of a consular agreement with China and progress towards resolving outstanding consular cases.

The department initiated and made significant progress towards concluding a consular agreement with China during successive negotiations in October 1998 and April 1999. A draft agreement was produced, which is expected to be the basis for final negotiations in August 1999. The conclusion of a final agreement would greatly improve our ability to assist Australians in distress in China.


The extent to which cooperation is strengthened with the Republic of Korea on economic, security, regional and consular issues through use of focused bilateral institutional arrangements and high-level visits.

The department worked actively throughout the year to strengthen the bilateral relationship between Australia and the Republic of Korea. In order to position ourselves to benefit from the ROK’s economic recovery, we initiated a resumption of senior officials’ and ministerial economic and trade talks. We also maintained a high-level focus on the broader bilateral relationship by facilitating visits in May 1999 to the ROK by Mr Fischer and the Minister for Defence, Mr John Moore, and the visit to Australia (also in May) of the ROK Minister for Commerce, Industry and Energy, Mr Park Tae-Young. These exchanges paved the way for more regular high-level exchanges, including by heads of government, and contributed to progress on the following key aspects of the bilateral relationship. Reflecting our focus on the Korean peninsula as an area of security concern, we worked for and achieved coordinated responses with the Republic of Korea on weapons of mass destruction and missile proliferation issues. We also worked closely with Australian business and other government agencies to advance market access issues (such as citrus and beef), and develop exports of financial services, processed food and automobiles. For example, following departmental representations and intervention by Mr Fischer, an Australian legal firm secured a major contract with the ROK electricity utility KEPCO, in the face of competition from a company with strong political connections.

Mr Fischer and Mr Zhu Rongji.

  • We actively pursued Government trade priorities on all fronts—in multilateral forums such as the World Trade Organization, the OECD and APEC, as well as in bilateral discussions. One priority is to remove barriers to Australian exports in overseas markets. During the year, we helped achieve greater market access to the Japanese market, contributed to strategies leading to new contracts for Australian exports to the Republic of Korea and secured in-principle agreement on bilateral market access issues relating to China’s accession to the World Trade Organization. The photo shows Mr Fischer meeting the Chinese Premier, Mr Zhu Rongji, in China during a three-day visit to China in May 1999. photo: Public Affairs Section, Australian Embassy Beijing


The extent to which Australian interests in the Hong Kong Special Administrative Region are protected, including through continued high-level contact and dialogue.

The department played a key role in the signing of an information technology memorandum of understanding with Hong Kong in July 1998, which has already delivered commercial dividends. Several Australian companies have since signed contracts with Hong Kong distributors for software products, following an IT business mission led by Senator Richard Alston in March 1999.

Figure 5 Australia’s Merchandise Trade with Hong Kong

Figure 5


Figure 6 Commodity Composition of Merchandise Exports to North Asia

Figure 6

We also supported two visits to Hong Kong by the Minister for Financial Services, Mr Joe Hockey, which further advanced Sydney’s profile as a regional financial centre, and contributed to the opening of the Asia-Pacific Loans Market Association office in Sydney in June 1999. Representing some of the region’s major financial institutions, this office seeks to promote and develop primary and secondary loan syndication markets in the region.


To advance Australia’s economic interests in the region by improving commercial access to markets, assisting Australian companies (including in bilateral government/industry forums), and promoting two-way investment.


The contribution made to improved Australian market access in North Asian markets generally.

The department continued to pursue increased market access for Australian exporters of goods and services, working closely with Austrade and other Government departments. Our achievements included:

  • successfully concluding negotiations for Australia to be recognised as an officially ‘approved destination’ for Chinese tourists—an outcome warmly welcomed by Australia’s tourism industry;
  • securing agreement on a standardised wool purchase contract with China, which should lead to lower levels of commercial disputation for Australia’s wool exporters;
  • concluding an information technology memorandum of understanding with Hong Kong, which will boost Australian information technology exports to Hong Kong and southern China;
  • promoting Australia’s interest in China’s growing services sector, including Australia’s claim for a second insurance licence, more licences for Australian law firms and banks, and expanding educational services;
  • raising Australia’s profile as a world-class provider of LNG and associated processing technology;
  • securing Japanese market access for Tasmanian Fuji apples and easy-peel citrus;
  • gaining accreditation for the CSIRO as a ‘foreign testing’ organisation in Japan, with contingent benefits for Australian building/housing exporters;
  • convincing Japan to relax requirements for foreign lawyers practising in Japan; and
  • pressing Japan on the issue of rice tariffs—a matter to be pursued in the forthcoming WTO negotiations. (Australia’s rice exports to Japan were worth $160 million in 1998.)


The extent to which mutual recognition arrangements and economic deregulation are promoted, including through the Australia–Japan Partnership Agenda.

The department coordinated submissions to Japan’s Deregulation Promotion Program which, combined with bilateral representations and the work of the Australia–Japan Building and Housing Committee, have seen modest advances in deregulation in Japan, with direct benefit to Australian housing industry exporters.

After a round of negotiations in July 1998, we held over further negotiation of a Mutual Recognition Agreement with Japan, pending the conclusion of negotiations on this agreement between Japan and the European Commission.

Figure 7 Australia’s Merchandise Trade with Japan


The contribution made to improved access for beef in the Republic of Korea.

In conjunction with the Department of Agriculture, Fisheries and Forestry – Australia, we continued to build support among Australian business for the Government’s strategy to ensure equitable beef market access in the Republic of Korea through liberalisation of distribution systems after the ROK moves to a tariff-only regime in 2001. Reflecting continued concerns by the department and business over the ROK’s commitment to effective liberalisation, and after joining US processes as a third party in February 1999, we sought separate WTO dispute settlement procedures. Mr Fischer agreed to the strategy in March 1999 and, after initial consultations with the ROK failed to resolve the issue, the department initiated a WTO dispute settlement panel against the ROK in June 1999.

Figure 8 Australia’s Merchandise Trade with the Republic of Korea

Figure 8


Progress in facilitating Australian exports to the Republic of Korea, including by applying Export Finance and Insurance Corporation National Interest Account support provisions and obtaining a waiver on ROK import restrictions that disadvantage Australia relative to our competitors.

In order to underpin Australian exports to the Republic of Korea, the department secured agreement to extend the Export Finance and Insurance Corporation National Interest Account for the ROK until July 1999. Reflecting an increase in international confidence and private-sector trade financing, the Government was able to reduce the size of the account from $500 million to $300 million.

After departmental representations, the ROK extended temporary tariff reductions on 58 tariff lines of importance to Australia until June 1999.

Again in conjunction with the Department of Agriculture, Fisheries and Forestry – Australia, we continued to press for finalisation of the ROK’s quarantine procedures for Australian orange and lemon exports. Further technical information has been requested by the ROK and finalisation is now expected by the end of 1999.


The contribution made to progress in WTO negotiations with China.

We reached agreement in principle with China on bilateral WTO accession issues. Major access gains were made for sugar, wool and wool tops, processed foods, auto parts, and key services exports in banking, telecommunications and professional services.

Figure 9 Australia’s Merchandise Trade with China

Figure 9


Effective support for initiatives aimed at increased Taiwan investment in Australia, particularly in the resource sector (including LNG).

The department encouraged and supported high-level negotiations on a range of trade issues during March and April 1999. As a result, a high-level Taiwanese business delegation will explore investment opportunities in Australia’s LNG sector during a visit to Australia in July 1999. We also resumed bilateral economic talks in March 1999 aimed at diversifying bilateral trade and increasing investment, and we commenced negotiation of an investment promotion and protection arrangement.

We encouraged the expansion of industry and academic links between Taiwan and Australia in the area of science and technology. This included an unofficial visit by Senator Nick Minchin to Taiwan and a highly successful showcasing of Australian science and technology at OzTech 99 in Taiwan in April 1999.

Figure 10 Australia’s Merchandise Trade with Taiwan

Figure 10


The contribution made to implementation and expansion of Taiwan’s interim trade access package.

We secured a commitment to legislate for a lower import tariff on Australian lobster and gained improved market access for Australian beef products, prior to Taiwan’s WTO accession.


To advance Australia’s security interests in North Asia.


The extent of our contribution to regional security dialogue through bilateral consultations with North Asian countries, the United States and other relevant countries, and through encouraging active North Asian participation in regional security institutions, particularly the ASEAN Regional Forum.

The department contributed to regional confidence through active participation in dialogue on important security issues with all the major powers in the region. In discussions, we advanced Australia’s security interests through reinforcing the importance of US strategic engagement, and by influencing the security perceptions of key players in favour of Australia’s interests. Our close consultation has fostered North Asian support for the Australian Government’s goal in the ASEAN Regional Forum of developing a preventive diplomacy function and asserting our core interests in North Asian security, allowing us more influence over the development of major power policies (for example, the US Perry Review of relations with the Democratic People’s Republic of Korea).

We continued to strengthen security links and achieved greater alignment of views on strategic issues with Japan, through support for a visit by the Defence Minister, Mr John Moore, annual Australia–Japan politico-military talks, and talks at senior officials level. The department also helped to strengthen defence links with China through high-level visits and senior officials’ dialogue.


The demonstration of Australia’s commitment to enhanced stability in North-East Asia and to non-proliferation of weapons of mass destruction, through active support for the Korean Peninsula Energy Development Organization, inter-Korean dialogue and multilateral humanitarian assistance to the Democratic People’s Republic of Korea.

The department continued to play an important and constructive role in helping maintain stability on the Korean peninsula and facilitated further humanitarian assistance to the Democratic People’s Republic of Korea. Achievements included securing financial and political support for the Korean Peninsula Energy Development Organization ($12.8 million to date); humanitarian aid for the Democratic People’s Republic of Korea ($19.5 million to date); and strong support for the Four Party and North-South dialogue processes. In direct discussions in Bangkok between senior officials from Canberra and Pyongyang in June 1999, we encouraged the DPRK to adopt a more positive approach in its relationship with the Republic of Korea and to respond positively to the concerns of the broader international community on questions of regional and global security.


To project an accurate, contemporary image of Australia in the region and inform debate within Australia and the region in support of Australia’s interests.


The extent to which reports of the East Asia Analytical Unit contribute to Australia’s reputation as a leading contributor in the field of economic analysis of East Asia.

During the review period, the East Asia Analytical Unit released two major new reports (Asia’s Infrastructure in the Crisis: Harnessing Private Enterprise, and Korea Rebuilds: From Crisis to Opportunity), and commenced work on a new report on financial sector reform in East Asia. These reports were well received, with extensive and positive press coverage in Australia and overseas. The department sold more than 950 reports prepared by the East Asia Analytical Unit, reflecting ongoing business and public interest.

Asia’s Infrastructure in the Crisis: Harnessing Private Enterprise was launched with a series of seminars in Sydney, Melbourne and Hobart. These occasions offered Australian infrastructure exporters insights into the implications of recent crisis-induced reforms and the prospects for new infrastructure activity in Asia.

The launch of Korea Rebuilds: From Crisis to Opportunity by Mr Fischer in Sydney in May 1999 was attended by the Korean Minister for Commerce, Industry and Energy, Mr Park Tae-Young and a delegation of Korean business people, whose visit helped further develop bilateral trade and diplomatic ties. Subsequent seminars in Melbourne, Perth, Adelaide, Brisbane and Seoul provided Australian and Korean business with an overview of new bilateral trade and investment opportunities flowing from Korea’s major reform program.

In February 1999, as part of the financial sector project, the East Asia Analytical Unit organised a nine-day workshop on financial market reform, sponsored by AusAID and in association with the National Centre for Development Studies at the Australian National University. This workshop brought together and provided training for middle-level finance ministry and central bank officials from East Asian APEC economies.


The development of non-official links and partnerships between Australia and Japan, and the promotion of a positive image of Australia in Japan, through the work of the Australia–Japan Foundation and the Japan Cultural Program.

The Australia–Japan Foundation is a statutory authority within the portfolio and produces its own annual report. Copies are available directly from the foundation on (02) 6261-3898 or from the website at

The foundation’s Japanese-language Australia website provided an average of 500 000 page views per month, and the public access Australian Resource Centre (which can be accessed through the Internet) serviced over 50 000 requests for information. Australian private-sector support for, and confidence in, this website was demonstrated through revenue and sponsorship totalling over $70 000.

Following an evaluation by the Japanese Ministry of Education of the first edition of the Australian Studies Teachers’ Kit, Discovering Australia, the foundation decided to develop a revised edition of the kit. This evaluation included a review of the kit’s use in 11 500 Japanese junior high schools over a five-year period. The foundation also initiated the development of a new Australian studies CD-ROM for use in Japanese universities, designed to complement Discovering Australia.

In addition, the foundation initiated and facilitated a broad range of projects to promote bilateral contact and expand non-official partnerships and links. One of these projects involved organising an extensive training course for ten Japanese teacher-in-service training providers to showcase Australian English language teaching methodology. Another was the provision of residencies for Australian participants in the ongoing Australia–Japan Arts Network scheme, which places up to three participants in key Japanese cultural organisations on a short-term basis.

Through the Japan Cultural Program, the department focused on Indigenous culture, with an extensive exhibition in Tokyo on the relationship between Aboriginal communities and mining companies. Included were displays and presentations on Aboriginal and Torres Strait art and culture. Media involvement and briefing on the exhibition contributed to more balanced reporting on Australia’s Indigenous cultures, and the widespread publicity attracted over 5 000 Japanese to the exhibition.

Also, visits to Australia under this program by six Japanese arts entrepreneurs, bureaucrats and an arts journalist expanded the pool of potential allies in the promotion of Australian culture in Japan, and introduced these influential visitors to quality Australian cultural product.


The development of non-official links and partnerships between Australia and China, and the promotion of a positive image of Australia in China, through the work of the Australia–China Council.

Through the Australia–China Council, we funded a major conference on Australian Studies at Beijing University in October 1998, which raised awareness of contemporary Australian issues in China. The department also established an Internet gateway into Australia from the National Library of China, an initiative that will greatly increase the profile of Australia among China’s rapidly expanding online community.


The development of non-official links and partnerships between Australia and Korea, and the promotion of a positive image of Australia in the Republic of Korea, through the work of the Australia–Korea Foundation.

The foundation completed its largest project to date: Exploring Australia, an innovative multi-media resource kit designed to raise Australia’s profile among young Koreans. Launched in Seoul in March 1999, the kit comprises written and video curriculum material on Australia, and has now been distributed to 3 000 junior high schools in Korea. The project also includes an interactive website to help Korean and Australian students talk directly to each other over the Internet.

The department led Australia’s participation in a Korea–Australia Forum in Seoul in December 1998. This meeting brought together eminent non-government delegates from both countries and identified new directions and areas of cooperation. Outcomes include an agreement to convene an Australia–Korea Press Forum, initiatives to increase the number of Korean students studying in Australia, and agreement to organise joint activities including an annual bilateral project, forums in targeted industries, expansion of university contacts, and consideration of a joint Australia–Korea research fund.

In conjunction with the Asialink Centre, the foundation hosted a major cultural festival in Seoul in September 1998 to showcase the best of Australian film and literature. The event introduced Korean audiences to internationally acclaimed Australian films, and enabled prominent Australian guest authors to promote their work and establish new links with Korean writers and publishers.

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