Our biggest Asian trading partner? It's not China

theage.com.au, Anthony Milner,March 5, 2009

TRADE Minister Simon Crean is right to herald the Australia-New Zealand free trade agreement that has finally been signed with ASEAN — but such a breakthrough is a matter of national and not merely commercial importance.

For too long, it has been "China, China, China" that dominates our media — with a bit of hype about India here and there. The fact is that ASEAN matters to Australia at lots of levels, and in the long term.

True, there has been dramatic economic growth with China and India. The recently released PWC Melbourne Institute Asialink Index shows a huge and consistent increase in trade with China since 1990, and another striking increase with India since 2002. But it is sobering to compare absolute, as well as growth, figures. Here the importance of ASEAN is clear.

As a grouping of countries, ASEAN is Australia's largest trading partner — with a population less than half that of China. Two-way trade with India remains less than that with Singapore or Thailand. The index covers trade, investment, education, tourism, migration, humanitarian assistance and "research and business development". It shows ASEAN to be Australia's "top engagement partner" in these areas.

Building the ASEAN relationship has been a long process. We became the grouping's first dialogue partner in 1974, and developed a degree of regional defence co-operation more intensive than that between the different countries themselves. There are counterterrorism agreements with ASEAN countries, and in many cases (including Indonesia) close police co-operation.

ASEAN matters to Australia because of the opportunities it offers — agriculture, industrial goods and service exporters. But it also matters because this is our region of the world, and it is still volatile. Despite the successes in Indonesia's transition to democracy, Thailand and Malaysia — both important partners for Australia — face serious political instability. Border tension has recently poisoned Thai-Cambodian relations, and territorial disputes continue elsewhere.

Burma remains a formidable regional problem. Then there is the issue of how ASEAN countries respond to the rise of China.

The growing interaction between Australians and ASEAN peoples — in such areas as tourism, education, business and the Australians living in ASEAN countries — brings its own issues. The execution of an Australian on drug charges in Singapore, imprisonment of another for lese-majesty in Thailand, a boat of would-be refugees from West Papua, a terrorist attack on Australian tourists — these are matters that can damage Australian relations around ASEAN. Given our failure to predict the 1997-98 Asian financial crisis, or the rise of terrorist groups claiming Islamic credentials, we cannot be confident about what new threats await us.

A sophisticated intelligence and academic expertise on ASEAN — alongside a rich business knowledge — is critical. But we need to get ASEAN right not only for the direct benefits that can bring. Effective engagement with ASEAN gives us street credibility, including in India and China. Our expertise is respected here — and our failures are likely to be widely publicised. An Australia that looks at odds with its region would be a damaging image. Working closely with ASEAN partners will have the opposite effect.

At the first Australia-New Zealand meeting with an influential, ASEAN network at the end of last year, it was suggested that Australia and Indonesia co-operate to represent ASEAN interests at G20 meetings. This is one collaboration that could enhance our global stature.

The new ASEAN trade agreement is a major advance for Australia — and the public should be engaged in such projects that shape our international identity.

Anthony Milner is Basham professor of Asian history at the Australian National University and professorial fellow at Asialink (University of Melbourne).