Abstract
The previous Abbott government had prioritized a general attitude to foreign policy captured by the phrase “Jakarta not Geneva,” which signified a preference for bilateral or minilateral interactions with the region rather than United Nations-based multilateralism. With Julie Bishop MP as Australia’s first female foreign minister, the Coalition also prioritized economic diplomacy, as exemplified by the repeated refrain that Australia is “open for business.”
This approach led to a preference for diplomatic venues and processes that focused on continuing investments in regional architecture, new emphasis on minilateral dialogues such as the Indian Ocean Rim Association (IORA) and Mexico, Indonesia, Korea, Turkey, and Australia (MIKTA), and more effort directed to bilateral and plurilateral processes such as the Trans-Pacific Partnership trade negotiations. This approach has been continued under Prime Minister Turnbull, with a renewed focus on innovation.
Part 1 considers minilateral and regional investments in the Indo-Pacific region, primarily, IORA, the Asia-Pacific Economic Cooperation (APEC), and the Association of South East Asian Nations (ASEAN). I consider MIKTA a unique vehicle for Australian diplomacy. Part 2 considers what issues Australia should be pursuing through these forums, with a focus on the two themes of gender equality (as an example of niche diplomacy) and trade (multilateralism under pressure) as case studies.
Beeson and Higgott argue that middle powers have the potential to successfully implement “games of skill,” especially at moments of international transition. How skilful have Australia’s efforts been in these minilateral dialogues, enhanced regionalism, and plurilateral processes, and what more can be achieved in these forums? Are these efforts creating more fragmentation of the rules-based order, or are they a way to overcome global governance stalemates? I set out the arguments for whether Australia, as a pivotal power, should generate more global options, or be more focused on inclusion in the Asia-Pacific region.
Introduction
This article considers the question of Australia’s choice of diplomatic forums. It does so against a backdrop of straitened diplomatic resources, aid cuts, and increased complexity in a multipolar world, and asks which regional forums offer “building blocks” toward multilateral convergence or “stumbling blocks” toward the fragmentation of the multilateral system and the pursuance of Australian national interest.
I adopt as a frame what former secretary of the Australian Department of Foreign Affairs and Trade Peter Varghese calls the “meta challenge of Australian foreign policy… namely, how to maximise economic opportunity and minimise strategic risk,” 1 as the Indo-Pacific region becomes more powerful.
The risks for Australia are pronounced. Perhaps akin to Mexico, Australia is in the region but not quite of the region. This was best exemplified by the 2012 White Paper on Australia in the Asian Century, 2 which was launched, then abandoned. Australia carries significant weight as an economic power with 25 years of uninterrupted growth (“twelfth is not the middle,” as former prime minister Rudd was wont to point out), 3 but growth prospects are weakening. 4
Australia also has a complicated relationship with two great powers in the region, tied very closely to China through trade, and to the United States of America (US) through well-known security alliances, which include Japan. 5 China is Australia’s largest trading partner, with bilateral trade worth more than A$150 billion in 2015, while Australia is China’s seventh largest source of imports and thirteenth largest export market. China is the largest source of foreign students in Australia, with 120,000 Chinese students in 2015. 6 The latest Lowy Institute Poll reflects this, showing that when Australians are asked which relationship is the more important to Australia, 43 percent nominate the US and 43 percent nominate China. 7 Most Australian foreign policy scholarship agonizes over the consequences of being caught between these two great and powerful friends. 8
Therefore, Australia’s recent diplomatic investments could be seen as generating options beyond the Asian region that step outside the US/China binary. Further, under the conservative government since 2013, there has been a pronounced focus on economic diplomacy and away from the United Nations (UN). The previous Abbott government had prioritized a general attitude to foreign policy captured by the phrase “Jakarta not Geneva,” which signified a preference for bilateral interactions with the region rather than UN-based multilateralism. On some issues such as climate policy and migration, Australia can often be out of step with the UN, and indeed other middle powers. With Julie Bishop MP as Australia’s first female foreign minister, the Coalition also prioritized economic diplomacy, as exemplified by the repeated refrain from then treasurer Joe Hockey that Australia is “open for business.” 9 Australia prefers the terminology “Indo-Pacific” and “pivotal power” to “Asia-Pacific” and “middle.” This approach has been continued under Prime Minister Turnbull. The four pillars of economic diplomacy are trade, growth, investment, and business—“opening up the Australian economy, to empowering private sector growth, to encouraging investment and creating conditions for business partnerships to flourish and trade to flow.” 10
This has led to a preference for diplomatic venues and processes that focus on continuing investments in regional architecture, new emphasis on minilateral dialogues such as the Indian Ocean Rim Association (IORA) and the foreign minister grouping from Mexico, Indonesia, Korea, Turkey, and Australia (MIKTA), and more effort directed to plurilateral processes such as the Trans-Pacific Partnership (TPP) trade negotiations. Australia has also prioritized the hot pursuit of bilateral free trade agreements (FTAs), following the Howard government agenda, which signed the Australia–US Free Trade Agreement 10 years ago.
Australia is actively driving these initiatives. The MIKTA leaders met in Sydney in September 2016 to prepare for their joint statement at the UN General Assembly. At the first Association of South East Asian Nations (ASEAN)–Australia dialogue in Laos in September 2016, Prime Minister Turnbull invited ASEAN leaders to meet in Australia in 2018. Foreign Minister Julie Bishop announced Mr. Simon Merrifield’s confirmation as Australia’s first resident ambassador to ASEAN in late 2013. Australia was a very active chair of IORA in 2014. Australia has recently concluded bilateral FTAs with China, Malaysia, Japan, and Korea. Australia is also involved in the negotiations of several major mega-regional agreements: the TPP, Trade in Services Agreement (TiSA), and Regional Comprehensive Economic Partnership (RCEP). Finally, Australia is now pursuing FTAs with India and the European Union.
I argue that minilateral dialogue and regional investments in architecture, as currently conceived, can enhance Australia’s multilateral efforts, and can represent innovation and a degree of creativity. For the projection of Australian values, soft power and niche diplomacy, such as gender equality promotion and new configurations of states, can prove useful and unlock consensus. On issues of trade policy, however, pursuit of outcomes outside the World Trade Organization (WTO) framework such as the TPP can raise more concern toward diffusion and added risks of weakening the UN system.
Part 1 considers minilateral and regional investments in the Indo-Pacific region, primarily, IORA, the Asia-Pacific Economic Cooperation (APEC), and ASEAN. I then consider MIKTA as a unique kind of entity for Australian diplomacy. Does Australia’s investment in new forums such as MIKTA help it pursue more “niche diplomacy,” to use the term from Andrew Cooper and Emel Parlar Dal in the introduction to this Special Issue?
Part 2 of the article considers what issues Australia should be pursuing through these forums, with a focus on two themes: women’s economic empowerment (as an example of niche diplomacy), and trade (as an example of multilateralism under pressure) as case studies.
Finally, we can assess how participation might help Australia achieve more status or recognition on the world stage. For example, how can participation in these new processes preserve the legacy of Australia’s Security Council term and G20 host year? Will these efforts assist Australia’s bid to join the Human Rights Council in 2018?
Beeson and Higgott argue that middle powers like Australia have the potential to successfully implement “games of skill,” especially at moments of international transition. 11 It requires a certain level of diplomatic infrastructure and investment as well as integrated strategy. As the introduction to the Special Issue argues, “This was certainly the case in the immediate post-1945 era when a cluster of secondary powers, notably Canada and Australia, attempted to carve out a new upgraded position based on a functional logic.” The questions are: how skilful have Australia’s efforts been in these minilateral dialogues, enhanced regionalism, and plurilateral processes, what are the challenges and what more can be achieved in these forums?
Part 1: Australian efforts to support minilateralism and regionalism
Australia has been very active in the last five years dealing with regional governance bodies and experimenting with new configurations, as noted previously. There is continuity, too, in terms of investment in regional architecture. During its G20 presidency, Australia focused on dialogue with countries in the immediate region and with Asia-Pacific groupings, including APEC, ASEAN, the East Asia Summit (EAS), and the Pacific Islands Forum (PIF), as well as the Commonwealth.
As a new development, Australia is working with Mexico, Indonesia, South Korea, and Turkey to form MIKTA, a group led by foreign ministers with a wider remit than the G20, but with obvious advantages for G20 caucusing (for more, see Jongryn Mo’s article). 12
Australia has continued to engage with the UN, but certainly the policy agenda has shifted away from multilateralism. Australia’s move away from the UN system can be explained in a few ways. One factor is the obvious case of political party preference in otherwise bipartisan foreign policy. The Australian Labour Party has long had a clear preference for strengthening the UN system; the Coalition has favoured the US alliance and bilateral, trade-based diplomacy as noted earlier.
The second factor is not unique to Australia. There is widespread academic consensus on the need to develop new responses to current blockages/failures in global governance, especially the inability of many multilateral forums to resolve current issues. The areas mooted for urgent reform are the need for post-Second World War institutions to adjust to the shift in economic power to Asia, especially China; responses to “wicked” transnational problems, such as pandemics, terrorism, and climate change; and the reverse issue of fair access to global public goods, broadly defined, including oceans, global value chains, humanitarian space, and many more.
In this sense, the rise of the regional or minilateral mechanisms to seek governance solutions in a multipolar world is self-explanatory.
MIKTA
Australia’s recent innovations in regional and minilateral governance forums are often linked to its current preference for economic diplomacy. Since 2013, Australia has worked with Mexico, Indonesia, South Korea, and Turkey to form MIKTA, a group led by foreign ministers from other pivotal powers in the G20, the premier economic forum. Foreign ministers grouped together to influence at the margins of an economic forum dominated by leaders, finance ministers, and central bank governors is the first striking characteristic of MIKTA.
The second is the country grouping, outside of normal geographic boundaries, not connected through historical ties like the Commonwealth, or development pathways like the BRICS. MIKTA is a relatively new grouping of foreign ministers from five systematically important economies, which began in September 2013. 13 MIKTA sees itself as a “cross-regional consultative platform” that aims to be a “bona fide enabler in terms of providing global public goods” through global governance reform. 14
MIKTA can model creative governance as a minilateral grouping showing leadership in ideas and new ways of thinking. It is an intriguing grouping (see the article by Emel Parlar Dal and Ali Murat Kurşu for more detail), defying usual classifications. MIKTA countries are proximate to the centre of power and current conflicts (for example, International Monetary Fund [IMF] reform), but not directly self-interested in particular outcomes. MIKTA can model that diverse paths to economic development add value to global governance conversations.
The MIKTA leaders have set out their vision in 2016. In my view, MIKTA should aim for a signature “opt-in” problem-solving initiative in its first three years that plays to its strengths and answers the questions why these countries, why now, and but for MIKTA, what may have happened? Three possible modes of action are evaluated for MIKTA—creative regionalism, problem solver, and bridge builder.
Creative regionalism
Each MIKTA country brings a regional leadership position to the table. Regional groupings are increasingly important to global governance. MIKTA has a comparative advantage in bringing diverse regional perspectives to the broader governance conversation and being able to audit and showcase the best ideas and thinking from ASEAN, APEC, IORA, and so on. Turkey’s and Australia’s regional roles are less straightforward and require further examination.
Nimble solutions for wicked problems
MIKTA should be in the business of bringing people together in creative safe spaces and generating options for global economic governance. Since they are responsible stakeholders in the global economy, this is a role that makes sense for MIKTA, akin to Nordic countries acting as mediators in the security realm. MIKTA can promote open, rules-based economies and progress toward the 2030 Development Agenda. MIKTA could build the skill set of the non-G8 countries in economic diplomacy. One area of interest might be monitoring the progress of the BRICS bank and the impact on regional banks. Another option is to focus on the economic impact of conflict and development finance. For example, the conflict-development nexus on the Security Council agenda is an area where MIKTA could make a contribution. MIKTA has already displayed a preference for humanitarian diplomacy in its first years of statements and communiqués.
Bridging “G20” concerns, breaking down blocs
MIKTA members could coordinate on certain issues that may lead to bolder reform. For example, MIKTA members could focus on more strategic deployment of the elected 10 members of the Security Council (E10), with better resourcing and lessons learned from previous experience. 15
MIKTA has a role to play in trade. Australia continues to invest in ASEAN and RCEP as well as APEC, with one long-term goal being the achievement of a Free Trade Area of the Asia Pacific. MIKTA offers a new lens for these conversations with Indonesia, South Korea, and Mexico. MIKTA could focus on trade facilitation, or behind-the-border reforms, or one aspect of the trade agenda where there may be possible movement.
MIKTA can pick one aspect of the G20 agenda that is of wider interest and concern to developing countries and try to move it forward—such as the social impact of cross-border infrastructure, or tax information sharing.
The risks for MIKTA are low but should be considered seriously, the largest being that it is too diffuse and reactive to have impact, or that it is simply ineffective. The current governance issues are so broad that, like the G20, the MIKTA agenda could struggle to find the appropriate filter to cover what it may or may not choose to work on. MIKTA will increasingly face this challenge due to the understandable strategy to delink from the G20 and have a broader set of issues so as to not project a voting bloc.
Attempts to broker solutions between the G7 and the BRICS may “draw fire” to MIKTA members. MIKTA has a wider remit than the G20, but with obvious advantages for G20 caucusing, which non-G20 members might resent. An oncoming storm is brewing over the idea that TPP rules will be presented to the WTO for approval, a process the BRICS may reject. Peter Varghese warns, “We should be cautious of any suggestion we can be a mediator or bridge.” 16 MIKTA will at least be very important as a grouping in keeping the avenues for communication open. Sometimes foreign ministers are crucial to economic processes led by other ministers in bringing a long-term relationship lens to the technical issues on the table. Much depends on the relationship between the current foreign ministers, as the grouping may not survive difficult relations in these early stages.
Much of the anticipated outreach success of MIKTA depends on a “good guy, pivotal power” reputation. Together, MIKTA represents real economic power, and its success as a grouping depends on that power. Acknowledging that power, and demonstrating a desire to be accountable to developing countries for a more equitable system, will be important.
MIKTA could deal with a perceived (or in my opinion, real) “Africa” problem by adding an African nation (Senegal as a New Partnership for Africa’s Development [NEPAD] representative, or Ghana or Botswana) to issue-based workshops as an equal policy partner.
There may also be uneven commitment to MIKTA from members ranging from South Korea as champion to Indonesia as skeptic.
IORA
IORA was established in 1997. In 2011, the IORA ministers agreed to six priority areas of cooperation. These are maritime safety and security, trade and investment facilitation, fisheries management, disaster risk management, academic and science and technology cooperation, and tourism and cultural exchanges.
IORA is a region that has at least four distinct attributes. The region holds over two billion people. It has been woven together by trade routes and sea lanes for hundreds of years. The Indian Ocean is still the centre of world trade—hosting half the world’s container ships at any one time. Finally, the Indian Ocean Rim is a site of immense cultural diversity.
IORA is a very new site but with very disparate actors. However, it is a site of innovation, serving as a new “ocean lens” on issues where the UN has been weak or had gaps. As a dialogue mechanism, it is an innovation for Australian diplomacy, not dissimilar to the Cairns Group mechanism (discussed later).
APEC and ASEAN
Australia was instrumental in the establishment of APEC in 1989. APEC’s founding mission is to promote non-discriminatory free trade and investment in the Asia-Pacific region. The agenda has broadened to include such issues as counter-terrorism, health pandemics, and infrastructure investment. Australia’s objectives in APEC include promoting trade and investment liberalization by members, encouraging members to reduce “behind the border” barriers to trade and adopt a range of trade facilitation measures, and boosting APEC’s contribution to fostering sound economic policies in member countries.
Australian investments in ASEAN are important, even while painstaking, work. ASEAN poses less risk to multilateralism, even though there is an ambitious pathway to economic integration. This is mostly due to the operation of the “ASEAN Way,” with its focus on consensus and non-intervention. The ASEAN Way refers to both a particular code of conduct of interstate relations and also a vision of decision-making procedures based on consultation and consensus. 17 The ASEAN Way originated as an innovative solution to tensions between states in Southeast Asia locked into an escalating security dilemma. 18 The 2007 ASEAN Charter outlines the core principles upon which ASEAN is based (ASEAN 2007 Article 2). 19
ASEAN is working on RCEP, a bundling of FTAs. APEC is working on a series of trade initiatives, including environmental goods. The trade measures in both ASEAN and APEC go to the broader, long-term vision of a Free Trade Area of the Asia Pacific, in which Australia wishes to be a full partner. In the second part of the paper, I outline how these efforts translate into two case studies. The first examination of how Australia has pursued women’s economic empowerment through regional and minilateral dialogue demonstrates “building blocks” for multilateral agreed gender equality agendas, promotes Australia’s values, and enhances soft power. The second examination of bilateral and plurilateral trade negotiations poses more of a stumbling block approach for Australia’s longer term interests, and negates its efforts to broaden its options for global engagement beyond the US/China frame.
Part 2: Case studies
Women’s economic empowerment and trade negotiations
Women’s economic empowerment as niche diplomacy
This section outlines the current measures being undertaken by governance groupings that have a focus on economic growth, where Australia is pursuing progress toward women’s economic empowerment, namely, APEC, ASEAN, IORA, the G20, and MIKTA.
Asia-Pacific Economic Cooperation
APEC is the most lively regional forum in terms of participation of women and consideration of women’s economic empowerment at a strategic level. The first APEC Ministerial Meeting on Women, held in Manila in 1998, paved the way for the drafting of the Framework for the Integration of Women in the APEC agenda, followed by guidelines. 20 APEC Women and the Economy forums have been held as high-level meetings since 1998. The Policy Partnership on Women and the Economy (PPWE) was established at the second Senior Officials’ Meeting in May 2011, held at Big Sky, Montana, USA, in the lead up to the 2011 San Francisco Declaration at the High Level Policy Dialogue on Women and the Economy. The PPWE is a single public-private entity to streamline and elevate the influence of women’s issues within APEC, supported by the secretariat.
APEC has also created platforms to gather good quality diagnostic data for policy influence, such as the APEC women and the economy dashboard. 21 APEC also showcases good gender practice and the good practices of women and men, and companies and government programs committed to gender inclusive growth. One APEC example is the site www.we-apec.com focused on increasing the numbers and success of female entrepreneurs. Generally, APEC is cited as a relatively successful organization in terms of gender mainstreaming. 22 The APEC Private-Public Dialogue on Women and the Economy is innovative, strategic, and seems capable of having policy influence on leaders over time.
Australia, which has been active in this area from the beginning of APEC, announced in September 2016 that it is co-funding the Women’s Livelihood Bond project, which aims to “mobilise private capital by providing loans for social enterprises and micro finance institutions to empower women to achieve sustainable livelihoods in Cambodia, Philippines and Vietnam.” 23 Australia will work with the Philippines to support a major ASEAN women’s business forum in the Philippines in 2017, as a commemorative event for ASEAN’s 50th anniversary.
Mexico, Indonesia, Korea, Turkey, Australia (MIKTA)
The MIKTA group releases joint statements, for example, in celebration of International Women’s Day at the UN in Geneva.
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They have also agreed to use their combined clout in other economic forums such as the G20 to achieve gender equality outcomes at a strategic level. “9. We agreed to work together to promote gender equality by advocating in our respective regions broader acceptance of the commitment to reduce the gender gap in employment by 25 percent by 2025, taking into account national circumstances. We will also encourage gender equality across the spectrum of MIKTA activities”.
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The Group of 20
The G20 has made incremental progress on gender equality issues as the “premier forum for macroeconomic cooperation.” Three MIKTA members, Mexico, Australia, and Turkey, have been instrumental in these reforms. The G20 leaders have committed to:
helping achieve progress on the G20’s commitments to “women’s full economic and social participation,” which was made in the Los Cabos Leaders’ Declaration at the G20 Mexico 2012; “women’s financial inclusion and education,” which was made in the St. Petersburg Leaders’ Declaration in 2013 (G20 Russia), and the Women’s Finance Hub. The Global Partnership for Financial Inclusion (GPFI) and the G20 Financial Inclusion Indicators initiated in Seoul were launched in 2012;
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“reducing the gap in participation rates between men and women by 25 percent by 2025,” which was agreed on in the Brisbane Leaders’ Declaration in 2014, and which would, if implemented, create 100 million new jobs for women.
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The female labour participation target represents a step forward for the G20, which has no secretariat and operates by domestic action coordinated with other members, supported by the international financial institutions.
Like APEC, G20 leaders have established official second track processes to aid their deliberations. Under the 2015 Turkish G20 presidency, the W20 engagement group was officially established to provide policy advice to G20 Leaders. 28 It was launched in Ankara on 6 September 2015 and the first summit took place on 15–16 October 2015. The Istanbul W20 communiqué made recommendations in areas of empowering women through strengthening linkages between education, employment, and entrepreneurship; increasing the number of women in leadership positions; ensuring women’s access to finance; and supporting women’s networks and women-owned enterprises (W20 2015). 29 The 2015 process was influenced by an open poll and delegate submissions, and proposed a monitoring system for future W20 summits.
China continued Turkey’s investment in the W20 in 2016, chiefly through the W20 Summit in Xi’an where the representatives of G20 countries and invited guests agreed to a communiqué to be presented to the G20 leaders in the lead-up to the September 2016 Hangzhou Summit (W20 China 2016). 30 China had some experience in this area having held a successful APEC Women in the Economy Forum in 2015 with discussions on women and green development, as well as women and regional trade. The All-China Women’s Federation hosted the 2016 W20 Summit with a keynote speech by China’s vice president, Li Yuanchao. Li opened the summit in Xi’an on 26 May 2016 and his speech demonstrated the increasing legitimacy of the gender and growth agenda, which the Chinese term “She-Power.” “It is all the more important to pool women’s wisdom and strength at a time when the global economic recovery remains fragile. As the Chinese economy moves into a New Normal, efforts are made to encourage mass innovation and entrepreneurship, and women are essential in this endeavour.” 31
The G20 itself and the engagement groups are supported by the international financial institutions, as noted. The IMF and the Organisation for Economic Co-operation and Development (OECD) have been exceptionally supportive of the W20, as has UN Women (an entity responsible for promoting women’s empowerment and gender equality) and the International Labour Organization. For example, the OECD held a panel in June 2016 on the G20 labour gap target. 32 These organizations are also involved with a new initiative called the High Level Panel on Women’s Economic Empowerment, led by UN Women, funded by Canada and the United Kingdom. The inaugural meeting of the panel was held on 15 March 2016 in the UN headquarters in New York. The panel is expert and not country based. There is no Australian involvement as yet. This high level attention by the leading economies and corresponding UN action is a welcome development, but is still to be tested in improved results within G20/UN members.
IORA
Australia has been a leader in promoting women’s economic empowerment in the IORA grouping. The IORA Perth Communiqué 2013 states at paragraph 19 that, “The empowerment of women and girls in the region is a high priority for IORA.”
The empowerment of women and girls in the region was identified as an important cross-cutting issue for two reasons cited on the IORA website: Women have been important contributors to the economic and social development of the countries in the region—a fact that needs to be acknowledged and strengthened within the Association in the future. Empowering women and girls is regarded as an essential part of the solution to some of the most serious global challenges of today: food security, poverty reduction and sustainable development.
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Invest in women’s education, professional development, and training. Promote national cultural identity—self, product, and place—in a way that encompasses the strengths and contribution of women. Contribute to broader understanding of the lived reality of women in IORA countries by funding research and analysis to develop the evidence base to inform policy decisions and measure progress to achieve gender equality. Implement gender responsive policy frameworks and budgets. Develop an IORA framework for responsible tourism to advance women’s economic empowerment. Take a whole-of-community approach to women’s economic empowerment.
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This focus on including the business community has strong antecedents. The Perth IORA meeting was preceded by “IORA Business Week,” which focused on regional trade and was well received. 35 The Perth meeting also saw the launch of an IORA Economic Declaration focused on “blue economy.” It contains the encouraging phrase “the prosperity of the region will only be realised fully by investing in the empowerment of women.” 36 A fund of one million dollars to support economic diplomacy initiatives and activities in the Indian Ocean region was established in 2014.
Under former minister for trade Andrew Robb, there was a distinct lack of gender analysis in the trade agreements (made public at least) and little female representation in expert advisory groups, trade negotiations, or trade delegations. The Department of Foreign Affairs and Trade (DFAT) has released a new Gender Strategy covering both aid and foreign policy, but with conspicuous absence of the trade portfolio. 37 This raises concerns that some of these gender initiatives and investments may not last ministerial succession. Julie Bishop has announced a new foreign policy white paper, the first in many years. The incorporation of women’s economic empowerment as a diplomatic strategy in that document will be illustrative of a stronger institutional commitment.
Trade negotiations—Potential stumbling block
In 2016, trade has become an increasingly sophisticated and difficult negotiating area. This section seeks to explore Australia’s role in supporting a rules-based international arrangement, including Australia’s historic approach to the multilateral trade regime, debates over the TPP negotiations, and the long-term consequence of favouring bilateral agreements over the multilateral regime. Stephen Pickford has opined that, “Trade is a major driver of global growth, but the growing list of bilateral and regional trade agreements is risking sidelining the multilateral system, and the World Trade Organization (WTO) as its centre.” 38 We must think more deeply about whether it is possible to spread risk and be nimble, at the same time strengthening the multilateral system while engaged in the nested game that is modern trade negotiations. An alien looking at Australia’s trade activity in 2015 might not recognize it as committed to trade liberalization. Others argue that in fact there is still a deep commitment to the WTO. 39
All nations, including Australia, state that they desire an open, predictable, non-discriminatory, and rule-based multilateral trading system, centred on the WTO. And yet, the universal consensus is that the trade system is in deep trouble. Many colourful descriptions abound over the state of the multilateral trading system and its potential rivals/“frenemies” in the mega-regionals, but Jean-Pierre Lehmann in Forbes is particularly potent: “Here we are in 2015 and the global trade agenda is in a total mess. The 20th anniversary of the establishment of the WTO marks a narrative littered with missed deadlines, disappointments, and failed negotiations. The Doha Development Round is dead and has been for some time even though officially unacknowledged.” 40 Partly this is because the fundamentals of trade are changing. Global trade is growing more slowly than global production. Trade growth numbers of 3.1 percent in 2014 and 4 percent in 2015 may be greater than recent years, but they remain significantly lower than long-term average growth rates. The DNA of trade is changing, with most trade experts urging reforms to the WTO in order to adapt to the new world of global value chains, integrated global standards, and transnational investment flows.
As the WTO reaches its twentieth anniversary, many WTO member countries are worried about a clash among blocs such as the BRICS versus the OECD nations, and backlash against certain globalization impacts by citizens. Important global trade negotiations stall while regional preferential trade agreements proliferate, often likened to noodle bowls or spaghetti.
Leaders at the Brisbane G20 Summit were also able to commit to defining a WTO work program on remaining issues of the Doha Development agenda. The leaders helped control trade protectionism through enhanced monitoring mechanisms but the WTO notes that the stock of restrictive trade measures introduced by the G20 in 2014 continues to rise despite the pledge. Then prime minister Abbott expressed hope that this outcome will “re-energise the global trade negotiations to tackle important outstanding issues such as trade in agricultural products and the liberalisation of important services sectors vital to global economic growth.” In sum, as economic diplomacy has achieved a certain primacy for Australia in 2014–2015, trade has become an increasingly sophisticated and difficult negotiating area.
Australia’s historic approach to multilateral trade
Australia has traditionally shown strong support for the Bretton Woods institutions and the WTO, based on the middle-power premise that “Australia can neither bully nor buy its way in the world so an international rules-based order is in our best interests. An effective multilateral system is the surest way to get there.” 41
The 1980s and 1990s were characterized by trade liberalization and the lifting of tariff barriers with (mostly) bipartisan support. 42 Australia showed leadership in the Cairns Group, a coalition of agricultural exporting countries with a commitment to reforming agricultural trade and trying to influence the Doha Round. The Doha Development Agenda was officially launched at the WTO’s Fourth Ministerial Conference in Doha, Qatar, in November 2001. Its fundamental objective is to improve the trading prospects of developing countries. However, since the collapse of the Doha Round in Cancun, Australia has felt obliged to pursue other options. The “emerging economies” are no longer emerging, but have arrived—the combined gross domestic product of the top seven emerging nations is now bigger than that of the conventional Group of 7 group of industrialized nations when measured in terms of purchasing power parity, according to data from the IMF. The contours of power are almost unrecognizable from 2001 to the present day.
Andrew Robb ascribes Australia’s pursuit of bilateral and plurilateral agreements directly to the failure of the Doha round. Because unlike the era of GATT—which ended in 1994, only 2 years before my last Press Club appearance—now the role of Trade Minister is not being swept along by powerful external currents of multilateral trade deals involving 150+ countries. The difficulty of landing the TPP with only 12 countries, albeit 40 percent of world GDP, illustrates how hard these multi-party agreements are. By the way, while I think it is still do-able, it has to be the right deal for Australia. Yet, with no WTO deal in two decades, in the modern era, as a country you’ve got to row your own boat in cutting bilateral trade deals, or risk our economy missing coming waves of growth. Waves can be caught, or if you leave your run too late, you can miss the cut and the next set may be a long time coming.
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Focus on the Trans-Pacific Partnership negotiations
The United States trade representative (USTR) Ron Kirk describes the TPP as “an ambitious, next-generation, Asia-Pacific trade agreement that reflects U.S. priorities and values.” 47 The TPP is sometimes called “WTO-Plus” or “21st century.” The TPP’s main focus is to reach agreement on disciplines configured to support the formation of transnational production networks, including intellectual property, investment, competition policy, services, customs procedures, and investor-state dispute settlement. The agreement is wide-ranging, covering some 20 areas, including competition, customs, e-commerce, intellectual property, investment, industrial relations, environmental norms, financial services, public procurement practices, and market access. There are 12 negotiating parties: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. There is accession architecture that may allow other countries to join in due course.
There has been a high level of debate on the impact of the treaty upon open government, intellectual property, the digital economy, workers’ rights, environmental protections, and public health. There has been widespread concern about the lack of transparency, due process, public participation, and good governance surrounding the TPP negotiations. In Australia the debate has had less profile in terms of process, with some business associations concerned that US businesses have better access to the negotiation text and some concern from parliamentarians. Negotiations were concluded on 5 October 2015 and the TPP treaty was agreed on 4 February 2016 in Auckland. A draft text was released in early November 2015 and the English-language version of the legally verified TPP text was released on 26 January 2016. 48 The treaty, annexures, side letters, and national interest analysis were tabled in Parliament on 9 February 2016 and a Joint Standing Committee on Treaties (JSCOT) inquiry sought submissions for just four weeks until 11 March 2016 and was then interrupted by the federal election.
The TPP has been negotiated like other trade deals but its unique features have left many stakeholders calling for a new process for consultation. Most debate has been about the impact of the agreement on public health 49 and intellectual property rights 50 such as the extension of patents over pharmaceutical drugs. The concern is that the “social licence to operate” in terms of trade negotiators is being eroded. One particular concern is the impact of investor-state dispute resolution clauses (ISDS) on domestic social policy.
The China–Australia FTA and the TPP have ISDS, part of a trend to insert such clauses into trade agreements. Typically these clauses empower businesses from one country to take international legal action against the government of another country for alleged breaches of the agreement, for example, for policies that allegedly discriminate against those businesses and in favour of the country’s domestic businesses.
Concerns about ISDS in Australia has been crystallized by Philip Morris tobacco suing the Commonwealth government in the jurisdiction of Hong Kong in relation to plain-paper cigarette packaging on the grounds of “an expropriation of its Australian investments.” There is a related WTO case that challenges the Australian legislation. Tim Harcourt, former chief economist at Australia’s trade promotion body, Austrade, said the ISDS was a “blunt instrument” to protect companies’ interests. “Giving international companies the right to sue countries left, right and centre is probably not the way to build those (free trade) institutions.” 51 The reaction of committed multilateralists in the human rights and development areas has been antagonistic to the TPP. Olivier de Schutter, former special rapporteur on the right to food has called for a human rights impact assessment of the TPP, claiming the TPP’s emphasis on regulatory policies suggests that, “business interests will trump human rights.” 52 Various human rights actors have queried whether the TPP provisions will be compatible with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights, or the principles and objectives of the World Health Organization Framework Convention on Tobacco Control.
If we adopt Draper and Ismail’s question of whether the mega-regionals represent “building blocks” toward multilateral convergence or “stumbling blocks” toward fragmentation, then governance scholars hold varied opinions about the likely outcome of a successful TPP. “Systemic scenarios will hinge, to a great extent, on how China responds and whether one of the unstated objectives of the US-led mega-regional drive, that of not necessarily excluding China but rather compelling the world’s second largest economic power towards accepting new norms and rules on pre-established terms, leads to gradual consent or contest—particularly in the context of a powerful Asia-Pacific coalition like the TPP where China is by design an outsider to negotiations.” 53 The US defense secretary Ash Carter was quoted in a speech in Arizona, saying the “TPP is as important to me as another aircraft carrier,” and Barack Obama also made comments like this: “If we don’t write the new rules for free trade around the world, guess what, China will. And they’ll write those rules in a way that gives Chinese workers and Chinese businesses the upper hand.” 54
Australia should reject any geopolitical drivers behind the TPP that are based on Chinese “containment.” When former prime minister Tony Abbott reportedly told Angela Merkel after the Brisbane G20 Summit that Australian foreign policy toward China is driven by “fear and greed,” 55 it was not an adequate response. If the TTP and TTIP are designed to set “the path of global standards,” 56 then they should not offer a “take it or leave it” formula to parties not involved in the negotiations. China acceded to the WTO in 2001 and should be encouraged to join the trade space as an active governance partner to ensure a “peaceful rise.” 57 Australian innovation in governance has generally been to facilitate options and open up space for consensus, but in the case of the TPP, its eagerness to be at the table at any price could place it squarely between the US and China, and undermine its commitment to the WTO.
What are some of the long-term consequences of the trend toward bilateral and plurilateral trade agreements? The best-case scenario is that they are complementary. Advocates argue that these agreements keep momentum and habits of cooperation strong during a slow period while the WTO inches forward the TiSA. The agreements could promote sustainable and balanced economic growth for all actors involved, even if modest, or the results could be substantial in gross domestic product (GDP) terms. Draper and Ismail argue that plurilaterals “could, in principle, be used to pioneer new rules or market openings in an otherwise clogged system, thus keeping the WTO at the centre of the global trading system.” 58
The worst-case scenario is the diminishment of WTO authority and growing complexity in dispute resolutions due to ISDS clauses, which impede the ability of governments to prosecute domestic agendas in public health. We may see delays in large trade issues that are best tackled in multilateral forums, such as trade facilitation, financial liberalization, telecommunication liberalization, and farming subsidies.
Moreover, the public could turn against the trade agenda and withdraw their support for an area of foreign policy that was once broadly approved of. Australia is pursuing the TPP with vigour and, in the case of bilateral FTAs, some considerable success, but these deals do not always have the social support required due to concerns they will be “Trojan Horse” deals that will allow international corporations to limit the measures that can be taken by national parliaments to promote public health, user-based intellectual property regimes, and technology transfer. Stephen Grenville from Lowy has put these questions very concisely: “While there are good reasons for conducting these negotiations behind closed doors, the general principles of our approach shouldn’t be secret. What issues do we feel strongly about? What do we have to give away and what will we win in return?” 59 My own conclusion is that we lose more than we gain in moving away from the multilateral trade system, acknowledging the limited options Australia has at its disposal.
Conclusion
The reframing of Australian diplomacy toward economic diplomacy has potential benefits, but the shift must be undertaken with rigour, coherence, and strategy. Choice of forums is particularly important to allow Australia to play the role of “bona fide enabler,” which suits the Australian style of pragmatic, solutions-oriented diplomacy. I argue that minilateral dialogues like MIKTA and regional investments in architecture can enhance or at least do no harm to our multilateral efforts; balance risk; and represent innovation and a degree of creativity. Our trade policy, however, raises more concerns toward diffusion and risk. In terms of “games of skill,” the TPP is more like three-dimensional chess where Australia follows rather than leads.
This article has considered Australia’s innovations in governance forums from a variety of perspectives. In reputational terms, participation in these new processes may preserve the legacy of Australia’s Security Council term and G20 host year, as well as assist in Australia’s bid to join the Human Rights Council in 2018. In strategic terms, Australia is generating options and new lenses for understanding governance problems, and creating deliberative space that does not force it into a position between US and Chinese interests in the region. The new foreign policy White Paper in late 2016 needs to pay particular attention to Australia’s conception of itself as a pivotal power.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author is an Australian Research Council (ARC) Future Fellow and acknowledges the ARC as a supporter of this research.
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Author Biography
Susan Harris Rimmer is associate professor in the Griffith Law School, Griffith University, and a current member of the MIKTA Academic Network. She has worked as a consultant to DFAT on an IORA event in 2014. She is the author of Gender and Transitional Justice: The Women of Timor Leste, and many refereed articles.