Relationship needs work - Australia and Japan - Brief Article

Business Asia, May, 2001 by Nadia Cameron

A new report has found that while the Australia-Japan relationship is still strong, more needs to be done to make sure it stays that way.

THE GOODS AND SERVICES we export may have changed, but Australia's economic relationship with Japan is just as important as it was 10 years ago, a new report has found.

Prepared by the Department of Foreign Affairs and Trade (DFAT) and launched at last month's inaugural "Australia-Japan Conference for the 21st Century", the report concludes that while Australia and Japan's relationship continues to play a major role economically in both countries, more could be done to further new trade opportunities.

The "Strengthening Australia-Japan Economic Relations" report, prepared by Australian National University's Professor Gordon de Brouwer and Dr Tony Warren, Network Economics Consulting Group, was aimed at providing an overview of the importance of the long-standing bilateral relationship Australia shares with Japan. The report also focused on why the relationship will continue to remain mutually beneficial for both countries.

Substantial regulatory reform and developments in new industries such as IT, banking and finance, and biotechnology were some of the key reasons why the relationship was vital to both nations, the report states.

"Significant changes have occurred in both economies as a result of regulatory reform, widespread adoption of information and communications technology and other factors," it stated.

"These changes are invigorating the traditional complementarities that have underpinned the relationship ensuring that Japan will remain Australia's top export destination for the foreseeable future. These changes and the new opportunities they create are setting the foundation for faster, more balanced growth in both countries."

The report identified 10 main factors which prevented businesses from gaining the most out of the current commercial relationship. The most prevalent issue hindering both, it claimed, was the outdated perception Australian and Japanese businesses have of one another.

Despite its economic stagnation and periodic recessions, Japan's importance as Australia's largest export market has continued right throughout the past decade, increasing its intake of goods and services from Australia by almost 65 per cent over that period. Japan represents a fifth of Australia's total exports, a quarter bigger than Australia's second largest trading partner, the United States. In 2000 alone, Australia sold $25.5 billion worth of goods and services to Japan.

The report suggests that it was not only up to businesses to embrace the new opportunities, but also governments to guide the trade industry into building up stronger relationships with Japan.

One key recommendation suggested in the report is for a new Australia-Japan Trade and Investment Facilitation Agreement, or TIFA. This agreement would enhance dialogue and cooperation in new emerging areas such as biotechnology, energy and resources, financial and other professional services, information technology, consumer and privacy policies, e-government and mobility of business people. It would also address many issues of concern to businesses in both countries -- intellectual property, common standards and competition guidelines for example.

Federal Trade Minister Mark Valle says that such an agreement would give economic relations between Australia and Japan a significant boost, and encourage further investment between the two nations.

"It would update the commercial framework of the relationship, and would be an appropriate next step towards deeper integration of our two economies," he said.

A full version of the report "Strengthening Australia-Japan Economic relations" is now available on-line at the DFAT website: www.dfat.gov.au.

POINTERS FOR SUCCESS

Top five things Australian businesses can do to further their commercial viability in Japan

* Explore new commercial possibilities in Japan

* Protect investments in long-term relationships from short-term demand for cost-cutting or quick returns to shareholders

* Develop new or invigorate current relationships with Japanese counterparts through initiatives such as staff exchange programs

* Customise products for the Japanese market

* Strengthen business cooperation and organisations, especially among small and medium sized firms

Source: "Strengthening Australia-Japan Economic Relations" report, DFAT.