Evolving Australia–Japan cooperation in dealing with the ‘three Cs’

Amid global uncertainties, strengthening like-minded nations’ bonds to deal with those challenges is vital. In the Indo-Pacific region, cooperation between Australia and Japan has been where the action is. There are three defining challenges—the so-called three Cs—that these key US allies are facing: climate change, China and Covid-19.

In recent decades, the relationship between Australia and Japan has been built on economic ties, but more recently the two countries have been layering cooperation channels to collectively respond to an increasingly Balkanised politico-economic landscape. Importantly, this trend has been fairly linear despite their respective leadership merry-go-rounds over the past decade or so. Why has Australia–Japan cooperation been so critical? And, given Japanese Prime Minister Yoshihide Suga’s abrupt resignation, how can new PM Fumio Kishida drive a joint response to these challenges with Australia?

The first concern is climate change. The decades-long economic partnership in the energy sector is a critical platform of the complementary relationship. Despite the rapidly growing energy demands in the region, Australia has served as the biggest and most stable supplier of energy and key minerals to Japan. Japan is the largest energy export destination from the Northern Territory, with 10% of its imported gas coming from the Port of Darwin.

Both Australia and Japan must now meet a new challenge of a swiftly decarbonising world. While Australia’s latest greenhouse gas emissions marked the lowest level yet, it is still ‘lagging at the back of the pack among developed countries’. Australia has only just joined other nations in pledging to reach net-zero emissions by 2050. Japan did so in October 2020. The two countries’ shifts to carbon neutrality will have stark implications for their trade pattern.

In this context, Japan and Australia are determined to map out how they can collaborate and mutually benefit from the low-carbon energy transition. Under their partnership on decarbonisation through technology, the two countries identified hydrogen and ammonia as potentially large opportunities and led the launch of a regional platform to establish a standard for carbon capture, utilisation and storage technologies.

The second challenge is their complex relationships with China. After surpassing Japan as the world’s second-largest economy in 2010, China has become the world’s dominant trading partner, swiftly taking the top trading position with more than 130 countries. For Australia and Japan, China’s share of their exports is around 40% and 20%, respectively.

While deepening economic interdependence with China has brought economic growth, it has not led to political stability. China’s trade and investment network has intensified interdependence in Asia and beyond, but this has also raised big uncertainties and made geoeconomic tools more influential. Japan struggled with China’s ban on exports of rare-earth elements a decade ago (and settled the case at the World Trade Organization) and, more recently, Australia has been suffering from economic coercion (which it is taking to the WTO) and foreign interference.

Australia and Japan have shown considerable commitment to the WTO-supported international trade regime and the broader post-war global order. The two countries have also worked together to sustain a credible rules-based multilateral trading system and share the view that some reforms to the WTO are necessary to maintain that system.

At the regional level, despite the deteriorating Sino-Australian bilateral relationship, they managed to conclude the Regional Comprehensive Economic Partnership (RCEP) agreement in November 2020, which sets, among other things, new provisions for data governance. Although the significance of those rules is practically limited, it could at least lay the common ground for controlling trans-border data flows. The formation of a digital trade order is an emerging front in standard-setting for cutting-edge technologies, and China’s recent application to join the Digital Economy Partnership Agreement between Singapore, Chile and New Zealand would boost the competition to set rules.

In this context, China’s proposed accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (which Japan salvaged with the help of Australia and other members after the US withdrew under former president Donald Trump) will also be a test case for Australia and Japan in securing a high-standard trading order.

On the security front, tensions are more glaring. Faced with China’s assertive pressure in the region, Japan has called on Australia to help lead resistance both directly and as part of the Quad with the US and India. Australia and Japan have also come to share similar stances and have taken a series of domestic countermeasures under the name of national security.

Both countries have excluded Chinese telecommunication firms from their 5G networks. Japan’s newly enacted land restriction law and Australia’s tightening investment screening are in the same line. Australia’s experience over the NT government’s 99-year-lease of the Port of Darwin to a Chinese firm which is now under review provides a useful lesson. While a similar situation is unlikely to happen in Japan, Tokyo can usefully draw upon its lessons.

Last and most importantly, the Covid-19 pandemic has changed the threat landscape across the globe. Australia and Japan have been among the front-runners in managing the health crisis, taking hardline approaches to border control that few other countries have taken. Australia made the most of being an island ‘fortress’ and implemented a series of ad hoc lockdowns, while some crowded parts of Japan were subject to constant strict measures, even during the Tokyo Olympics. Australia is now bracing for the expected rise in cases that reopening its borders to international travellers will bring.

Built on a deep economic relationship, solid people-to-people ties, close political links and a special strategic partnership, Australia and Japan have become mutually indispensable. Despite revolving-door politics in both countries, the relationship will be crucial to maintaining the global rules-based order as it comes under further pressure.