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2014 Media Kit
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Australia’s Abbott faces tough mission on “trifecta of trade” in Asia

By: | at 12:14 PM | Channel(s): International Trade  

Australian Prime Minister Tony Abbott wants to finalize a free trade agreement with Japan on his forthcoming North Asia trip, but will have to walk a fine line between Tokyo and Beijing over geopolitical tensions in the region.

Abbott leaves for Japan on Saturday, kicking off a tour that also includes South Korea and China. China is Australia’s top export market, followed by Japan and South Korea.

“This is the trifecta of trade we are working towards,” Abbott said in an address to the Asia Society in Canberra last week ahead of his first visit to the region.

After clinching a free trade deal with South Korea late last year, Abbott hopes to complete a similar deal with Japan after seven years of talks and to make “substantial progress towards freer trade” with China during his one-week long trip.

But Abbott is seen in China and South Korea as “very pro-Japanese”, making his visit a difficult mission to balance between Japan and its neighbors, said Hugh White, professor of strategic studies at the Australian National University (ANU).

“The problem for Abbott is that if his visits in South Korea and China are going to go well, he will have to distance himself from Japan and have to step back from a very pro-Japanese position he has taken so far,” White said.

Abbott has regularly talked up Australia’s relationa with Japan since coming to power last September, describing Tokyo as Australia’s “best friend in Asia” and inviting his Japanese counterpart Shinzo Abe to address parliament later this year.

Australia’s relationship with Japan has been “one of the most mutually beneficial bilateral relationships in global history”, Abbott said recently, while putting a condition on Australia being a “strategic partner” of China.

“As liberalisation spreads from the economy into other elements of Chinese life, I am confident that Australia will be a valued friend and strategic partner…to the Chinese people and government,” he said.

Such comments have inserted Australia deep in political divisions in the region, where China and Japan have long clashed over territory and other issues.

Abbott set a one-year deadline to strike a free trade deal with China when he was elected, but the deal still looks remote after nine years of negotiations.

“If Abbott continues to adopt the kind of policies on strategic and political issues which have been adopted so far since he came to office, then I think it’s quite likely that the Chinese will go so far as to refuse to sign or at least slow down the talks,” White said.

Japan Deal Close

Abbott has instead set the Japan free trade deal as his top priority, promising to drop tariffs on manufactured imports, including Japanese cars, while pushing Japan to cut tariffs on Australian agricultural goods, particularly beef.

Japan is already Australia’s biggest beef export market both in volume and value terms, taking almost a third of all beef exported in 2012, according to Meat & Livestock Australia.

Australia has now a smaller hurdle on tariffs for imported Japanese autos after domestic units of the three remaining carmakers - Toyota Motor Corp, General Motors and Ford Motor - decided to quit domestic production by 2017 due to high costs and a strong currency.

Australia’s win this week over Japan in the International Court of Justice over its whaling programme in the Southern Ocean was not seen as a major threat to the talks.

“I will be building on what is a very good relationship, a relationship that is much, much bigger than any disagreement we might have had about whaling,” Abbott said. (Reuters)