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Australia: Australia Foreign Relations

2011/06/06

 

 

 

Australia Foreign Relations

since federation in 1901, and Australian forces have fought beside the United States and other Allies in each significant conflict since World War I. On January 8, 1940, the governments of the United States and Australia announced the establishment of bilateral diplomatic relations. In 1944, Australia concluded an agreement with New Zealand dealing with the security, welfare, and advancement of the people of the independent territories of the Pacific (the ANZAC pact). After World War II, Australia played a role in the Far Eastern Commission in Japan and supported Indonesian independence during that country's revolt against the Dutch. Australia was of the founding members of the United Nations, the South Pacific Commission, and the Colombo Plan. In addition to contributing to UN forces in Korea--it was the first country to announce it would do so after the United States--Australia sent troops to assist in putting down the 1948-1960 communist revolt in Malaya and later to combat the 1963-1965 Indonesian-supported invasion of Sarawak. The United States, Australia, and New Zealand signed the ANZUS Treaty in 1951, which remains Australia's pre-eminent formal security treaty alliance. Australia sent troops to assist South Vietnamese and U.S. forces in Vietnam, and joined coalition forces in the Persian Gulf conflict in 1991, in Afghanistan in 2001, and in Iraq in 2003.

Australia-New Zealand-U.K. agreement and the-Power Defense Arrangements--successive arrangements with Britain and New Zealand to ensure the security of Singapore and Malaysia. Australia participates in a Trilateral Security Dialogue with the United States and Japan of the drafters of the UN Charter, Australia has given firm support to the United Nations and its specialized agencies. It was last a member of the Security Council in 1985-86, a member of the Economic and Social Council for 1986-89, and a member of the UN Human Rights Commission for 1994-96 and 2003-2005. Australia is seeking a non-permanent seat on the UN Security Council for 2013-2014. Australia takes a prominent part in a lot of other UN activities, including peacekeeping, nonproliferation and disarmament negotiations, and narcotics control. Australia as well is active in meetings of the Commonwealth Heads of Government and the Pacific Islands Forum, and has been a leader in the Cairns Group--nations pressing for agricultural trade reform in World Trade Organization (WTO) negotiations--and in founding the APEC forum. In 2002, Australia joined the International Criminal Court.

Australia has devoted particular attention to relations between developed and developing nations, with emphasis on the 10 nations of the Association of Southeast Asian Nations (ASEAN) and the island states of the South Pacific. Australia is an active participant in the ASEAN Regional Forum (ARF), which promotes regional cooperation on security issues, and has been a member of the East Asia Summit since its inauguration in 2005. The Rudd government argued that the Asia-Pacific area needs a regional body that addresses both security and economic issues. In September 1999, acting under a UN Security Council mandate, Australia led an international coalition to replace order in East Timor upon Indonesia's withdrawal from that territory. In 2006, Australia participated in an international peacekeeping operation in Timor-Leste (formerly East Timor). Australia led a regional mission to replace law and order in Solomon Islands in 2003 and again in 2006. Australia is part of the Asia Pacific Partnership on Clean Development and Climate, which as well includes the United States.

The government is committed to increasing official development assistance to 0.5% of gross national income by 2015-2016. Australia budgeted $A4.35 billion (U.S. $3.9 billion) for FY 2010-2011 and $A3.82 billion (U.S. $3.4 billion) in FY 2009-2010. The Australian aid program is currently concentrated in Southeast Asia (Indonesia are the major recipients) and the Pacific Islands. Selected aid flows are allocated to Africa, South Asia, and reconstruction in Afghanistan and Iraq. Contributions to world programs and other expenses account for 39% of the foreign assistance budget.

 

Australia's economy is dominated by its services sector, from now on it is the agricultural and mining sectors that account for the bulk of Australia's exports. Australia's comparative chance in the export of primary products is a reflection of the natural wealth of the Australian continent and its small domestic market; 22 million people occupy a continent the size of the contiguous United States. The relative size of the manufacturing sector has been declining for several decades, but has now steadied at around 8.5% of GDP. The world recovery is putting upward pressure on prices for Australia's commodity exports, which is expected to cause a substantial rise in the terms of trade in 2010. The terms of trade were expected to rebound by around 25% by mid‑2010, injecting $30 billion into the economy and helping to reinvigorate the mining sector and economic activity additional generally.

Since the 1980s, Australia has undertaken significant structural reform of its economy and has transformed itself from an inward-looking, highly protected, and regulated marketplace to an open, internationally competitive, export-oriented economy. Key economic reforms included unilaterally reducing high tariffs and other protective barriers to free trade, floating the Australian dollar, deregulating the financial services sector, including liberalizing access for foreign banks, increasing flexibility in the labor market, reducing duplication and increasing efficiency between the federal and national branches of government, privatizing a lot of government-owned monopolies, and reforming the taxation system, including introducing a broad-based Goods and Services Tax (GST) and large reductions in income tax rates.

Australia enjoys of the highest standards of living in the G7. Australia's economic standing in the world is a result of a commitment to best-practice macroeconomic policy settings, including the delegation of the conduct of monetary policy to the independent Reserve Bank of Australia, and a broad acceptance of prudent fiscal policy where the government aims for fiscal balance over the economic cycle. Economic recovery is strengthening, with GDP estimate to grow by 3.25% in 2010‑2011 and 4% in 2011‑2012, leading to further reductions in the unemployment rate. The success of monetary and fiscal stimulus will help the budget return to surplus in 2012‑2013, 3 years ahead of schedule. Net debt is expected to peak at 6.1% of GDP in 2011‑2012, considerably below the previous estimate of 9.6% of GDP.

The unemployment rate was expected to fall from its early-2010 level of 5.3%, down to 5% in late 2010‑2011, and 4.75% in late 2011‑2012, around levels consistent with full employment. Labor market participation has remained at around 65%. Both the federal and national governments have recognized the need to invest heavily in water, transport, ports, telecommunications, and education infrastructure to expand Australia's supply capacity. The major river system in Australia, the Murray-Darling, and related coastal lakes and wetlands in South Australia are critically threatened, and the government has developed a plan to improve irrigation infrastructure and efficiency and buy back unused water allocations along the river.

A second significant issue is climate change. A statement commissioned by then-Prime Minister John Howard recommended a domestic carbon emissions trading scheme and that Australia take an active role in developing a next world carbon emissions trading system. Prime Minister Kevin Rudd had planned to introduce a domestic carbon trading system by 2011 to reduce emissions by 5% from 2000 levels by 2020. However, the Rudd government later deferred legislation establishing an emissions trading scheme until 2013, at the earliest.

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