Australia’s long history of Asian engagement

| February 23, 2020

How Australia engages with Asia has been a dominant question in 21st century foreign policy, mainly driven by issues of trade and immigration, but geopolitical strategy as well. It has led to several “White Papers” on the subject.

In 2012, then-Prime Minister Julia Gillard launched her famous but short-lived White Paper on the Asian Century. She wanted to open the economy to social democracy in the labour market.

As White Paper author Ken Henry put it: “Julia Gillard was looking for a positive economic narrative that tied together a positive labour market story with an open economy to show that you could have a high skill high wages Australian labour market in the Asian in the Asian century. Gillard was looking for a positive narrative as opposed to the ‘Two-speed economy’ and alleged need to cut wages because the real exchange rate is making Australia is uncompetitive. This sort of drivel was being put about by Warwick McKibbin, Ross Garnaut, and others at the time.

Julia Gillard wanted to say: ‘Today our strength doesn’t defend our social model – it relies on our social model.’ Gillard got support from various progressive business leaders in this point. Transport CEO, Lindsay Fox said we did well in Asia because of our high labour standards, occupational health and safety etc. not despite them and our relationships. That’s why Asia wants to partner with Australia.”

Amusingly, Gillard, told the story, “When I launched the paper at the Park Hyatt in Melbourne, a visiting Asian businessman said to me: ‘You know I only came here expecting lunch and now you’ve given me my own century!’”

At a forum at Parliament House, on a panel with Craig Emerson, who had initiated the White Paper, and ANZ CEO Mike Smith (ANZ was one of only 6 Australian private sector businesses who had actually made a submission to the White Paper Process),  I made the comment that “The White Paper had finally buried White Australia,” sending a retired DFAT official into apoplexy. But later, when I went on Sky News to discuss the White Paper on the Asian Century and the compere said to me: “Thanks Tim for your analysis of the White Century,” I realised we had a long way to go.

But the Asian Century White Paper did draw some criticism. Former Prime Minister Kevin Rudd made the assessment that “The Asian Century report was established by the Gillard Government merely to show that Julia could ‘do Asia.’”

And from the Opposition benches, Julie Bishop said, “I think the White Paper does have a number of goals, it sets out a number of aspirations, and it makes some observations with which we would all agree.” But she also pointed out that “previous governments have understood the need to engage with Asia.

The past is not another country

Certainly, going back to the 50s, the Menzies Government got it immediately after the war that it needed to more deeply engage with Asia. That’s why the original Colombo Plan was announced in 1951, and that’s why trade treaties were with Japan were entered into in the 1950s.”

Then, in 2017, Foreign Minister Julie Bishop brought down her own White Paper on Foreign Policy, which talked about “a stable and prosperous Indo-Pacific.” She pointedly used the term “Indo-Pacific” instead of “Asia Pacific” to emphasise ties with India and Indonesia, as well as the well-established partnerships with Japan, South Korea, China, and ASEAN.

Whether Australia talks about the “Asia Pacific” or “Indo-Pacific” or the “Asian century,” it is clear that economic engagement with its neighbours in the “Near North” (rather that the quaint Anglo-American term, “The far East”) is the cornerstone of the nation’s economic potential. But this was not always the case, as much of our past attitudes to Asia were based on fear, shaping our defence and immigration policies. Our future is clearly about opportunity.

Trade has dominated the Asian engagement story in recent years, but it does have a long history. In fact, the first Australian traders with Asia were the Indigenous people of Arnhem Land who met fishermen from Makassar (now part of Sulawesi in modern Indonesia) in the 17th century to trade Trepang (sea cucumber, thought to be an aphrodisiac).

Trade saved the convict colony of New South Wales in the 18th century from economic ruin, and in the 19th century, Chinese migrants to the Gold Rush helped develop Australia’s retail sector. Many took the concepts with them back to the major urban centres of China.

And there were further forays of trade into Asia. The colonies (now states) tried a few trade missions in the later 19th century. After Federation in 1901, Australia set up a Trade Commissioner in Shanghai in the 1920s, in Tokyo in the 1930s, despite objections from the British Foreign Office, and even in Batavia (now Jakarta) in the Dutch East Indies (Indonesia).

But war, depression, and war again put a stop to this Asian engagement (British interests tried to curb Australia’s trade with Japan in the 1930s, for instance) and the Ottawa Agreement of 1932 cemented Imperial trade preferences within the Commonwealth (British Empire), excluding those outside “the pink bits on the map.”

But it was really the post-World War Two period in the 20th century that saw Australia’s trade relations with Asia accelerate. And both sides of politics have made their own contributions at different times.

Post-War Relations

In 1957, Country Party Leader and Trade Minister Sir John ‘Black Jack’ McEwen forged the Commercial Agreement with Japan. The agreement, signed by McEwen and Japanese Prime Minister and Foreign Minister Nobusuke Kishi (grandfather of current Japanese Prime Minister Shinzo Abe), gave Australia a beach head into the Asian Century, and allowed Japan back into the multilateral trading system after the horrors of the War and the militarist regime.

McEwen had to fight members of his own party, particularly returned soldiers who, as Prisoners of War (POW), had suffered at the hands of the Japanese. According to Doug Anthony, McEwen’s successor as Country Party (later, National Party) leader: “The RSL were very uneasy with McEwen making headway with Japan.

The RSL formally opposed it although some senior members privately backed McEwen and, in the end, he outwitted them all.” But it worked, and in less than a decade, Japan had overtaken the UK as Australia’s number one export destination and later became a major foreign investor in Australia.

On the Coalition side of politics, the Country (National) Party drove Asian engagement as much as the Liberal Party, if not more. Tim Fischer was a champion of closer ties with Asia, particularly Thailand, and as Doug Anthony reflected, his party wanted to ‘pivot’ towards Asia more than Menzies did:

“Unlike Menzies, McEwen wanted us to do more in Asia. And just as well he did, because when Britain later joined the Common Market, they wanted nothing to do with us and luckily, we had developed these alternative markets in Asia by then. McEwen and public servant Jack Crawford really started it all off.”

And it suited both McEwen and Menzies to let McEwen take the lead on the Japan agreement. Anthony recalls: “McEwen thought the decision was ‘natural’ as he thought Japan was the obvious place for Australia to go trade-wise after the UK and the USA. And Menzies let McEwen pursue Japan, given the political risk involved and the fact that Menzies was more comfortable with the UK given his love of Britain’s legal and academic institutions.  Menzies didn’t want to push ourselves into Asia too much.”

In 1971, it was Labor’s turn. Opposition Leader Gough Whitlam, on the eve of becoming the first Labor Prime Minister since 1949, travelled to Peking (Beijing) and made it party policy to recognise China. It was a huge risk with the Cold War still on, and Whitlam faced much criticism. That subsided when it was revealed that Henry Kissinger and President Richard Nixon were planning the same course of action as Whitlam. Whitlam won the election and visited Beijing in 1973 as Prime Minister.

For Whitlam, there was also the dreaded White Australia Policy to get rid of. “You can’t trade with people if you don’t let them in your country” was Whitlam’s logic, as he and South Australian Labor Premier Don Dunstan made sure that immigration policy was not determined by race. As Whitlam later said: “The White Australia Policy, championed by the labour movement as anyone else, crippled our credibility in Asia for a century”.

Of course, Whitlam got a lot of credit for China, even from the Country Party, whose Leader Doug Anthony once said:  “Gough’s trip to China surprised us all. Gough always wanted to take a risk and make a big statement with everything including foreign policy.”

Whitlam also got credit from within his own ranks on China as a foreign policy achievement more than an economic one. As former Prime Minister (then ACTU President) Bob Hawke said about Whitlam: “What Gough knows about economics you could write on the back of a postage stamp and still have some room to spare.”

Hawke had wanted Whitlam to focus more on economics, and just before the 1972 election, at the ALP federal executive, he said: “Gough…you’re going to do some great things in government in the social welfare area and internationally…but your government will live or die on how you handle the economy.”

When I put this to Whitlam in an interview about his time as Prime Minister compared to Bob Hawke’s, Whitlam said: “Bob Hawke’s greatest advantage as Prime Minister was that he didn’t have to deal with Bob Hawke as ACTU President.”

In the 1980s and 1990s, it was Labor’s turn again. The Hawke-Keating reforms made a big difference to Australia’s future prosperity.: opening up the economy, reducing tariffs, floating the exchange rate, setting up new regional institutions like APEC, and actively engaging in the region (e.g. Foreign Minister Gareth Evans’s peace negotiations in Cambodia).

Hawke’s championing of Chinese students in a tearful speech in the aftermath of  Tiananmen Square was symbolic of his passion for China and better relations with Asia, and after a hard nine years as a reforming Treasurer, Keating made engagement with Asia the centrepiece of his prime ministerial vision for the nation’s future.

John Howard was very diligent in building relations in Asia, but his heart was really in the Anglo-American world. Hawke was managerial and competent in Asia. But Paul Keating really started to pull the strings and assemble the elements of good, deep relations.

Keating was a calculated risktaker.  He put himself on the line over Asia, like he did in Aboriginal Affairs with the famous Redfern speech. He had confidence in himself and confidence in Australia that the country could do great things as part of the Asia region.

Finally, post-Hawke-Keating, both sides of politics made contributions, particularly during global economic downturns. Howard and Peter Costello kept their nerve during the 1997-1999 Asia Financial Crisis, as did Kevin Rudd’s government during the 2008 Global Financial Crisis .

The domestic stimulus package designed by Ken Henry (“Go hard, go early, go households”) stimulated local economic activity and employment – as did the China and ASEAN stimulus packages – and Australia was one of the few major economies to avoid recession.

Now, we have some new challenges with the rise of economic populism, breakdown of multilateral institutions, climate change, and health crises. But one thing is for sure: Australia’s economic ties with Asia will be an advantage as we grapple with these global economic problems and disruptions. As Keating said, “we get our security in Asia not from Asia.”

Of course, there are a lot of unsung heroes in this story beyond Prime Ministers and Trade Ministers. Businesspeople, trade officials, trade unionists, economists, and educators have played an important role. So have key players offshore, Asian statesmen and women who are well-disposed to Australia. And then there’s the role of Asian immigrants and Australians with Asian origins.

In 1966, the celebrated economic historian Geoffrey Blainey wrote that Australia’s history was shaped by “The Tyranny of Distance.” Yet that very year, Japan overtook the UK as our number one export destination (a title held more recently by China). In that moment, “The Power of Proximity’ was beginning to take shape as Australia began to find its economic place in the Asian Century.

This article was published in two parts by the Australian Institute for International Affairs.