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Saturday 20

October, 201811:56 PM



Australia joins US-Japan Pacific deal

Australia joins US-Japan Pacific deal

Australia has announced this week that it will join efforts with the US and Japan to strengthen the Indo-Pacific trade region, with infrastructure investment in place to combat China's continuing "Belt and Road" initiative.

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By Oliver King 02.08.2018

Australia has announced this week that it will join efforts with the US and Japan to strengthen the Indo-Pacific trade region, with infrastructure investment in place to combat China’s continuing “Belt and Road” initiative, said to be a 21st century take on the Silk Road.

With the US and China in rapidly developing trade disputes, the two nations are looking to work with their allies to shore up and improve other trade routes.

The US and its allies, including Japan and Australia, are looking to exert more influence in the Indo-Pacific region to put a break on some of the diplomatic pressure stemming from East Asia.

Given that Australia has cut the amount of funding that it puts into its foreign aid budget under Prime Minister Malcolm Turnbull and previous ministers, analysts are unsure as to how much financial backing that this will actually require, as the announcement itself contained relatively little information.

Australia’s Department of Foreign Investment and Trade, the US Overseas Private Investment Corporation and the Japan Bank for International Cooperation officially announced the deal jointly.

Their statements hailed the idea that to make any strong investments between nations, an understanding has to run on “transparency, open competition, sustainability, adhering to robust global standards, employing the local workforce and avoiding unsustainable debt burdens”.

The Belt and Road initiative, meanwhile, is leading to increasing warnings that reliance on a strong nation such as China for economic dependence while it gets to expand geo-strategic influence could have negative impacts in the long run.

Foreign Affairs Minister Julie Bishop said that Australia’s involvement in this trilateral agreement acknowledges that working together is vital to “enhance peace and prosperity in the Indo-Pacific region”. She mentioned that the partnership would help with the challenges of development, make the whole region much more interconnected and enable more economic growth.

Bishop’s spokesperson confirmed that details will develop in the coming months, as a formal memorandum is yet to occur. Australia will elaborate on its required economic involvement in the program at a later time, and no information is currently available.

Director of the Lowy Institute’s Pacific Program Jonathan Pryke said that it is likely that the lending aspect will come from Japan – Australia and the US will be relied upon for resources and delivery of the program. 

Pryke, however, added that this “raises more questions than it answers”, with an effective rival to China’s Belt and Road initiative expected to run into the hundreds of billions of dollars. There is currently no expectation that the three nations will provide this kind of funding.

Australia’s Minister for Trade and Investment Steve Ciobo confirmed that this deal is “absolutely” not being positioned as a rival to China’s initiative and that the move is merely about making sure that “Australia is very active in engaging with developing economies”.

He added that the nations working together is a collective effort to provide the infrastructure required to allow for connectivity and prosperity. 

This news comes just one month after Australia said that it would be jointly funding work to deliver underwater telecommunications to the Solomon Islands in a deal originally awarded to Chinese phone and electronics giant Huawei. 

Nick Warner, Head of Australia’s Secret Intelligence Service, had reportedly advised the Solomon Islands against working with Huawei. Australia’s latest move is a relative reassertion of influence in the Pacific.

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