Defend the rules-based order or be condemned by history: Julie Bishop

Future generations will judge current world leaders for how rigorously they defended the rules that have underpinned a period of relative global peace and prosperity, Foreign Minister Julie Bishop has declared as seismic shifts in strategic and economic power play out on Australia's doorstep.

Ms Bishop has issued the warning about "the test for our generation" as governments of the Asia-Pacific respond to Fairfax Media's revelation that China has approached Vanuatu about establishing a permanent military presence on the island nation.

In a foreign policy address on Wednesday at La Trobe University, the Foreign Minister will compare the generational challenge of maintaining the rules-based international order to historical responses to the Industrial Revolution, the Great Depression and the rise of Nazi Germany.

Foreign Affairs Minister Julie Bishop.Credit: Alex Ellinghausen

Ms Bishop will argue that, in the decades since the end of World War Two, the rules-based order has protected smaller nations from larger ones and enabled a period of stability and prosperity that has carried particular benefits for Australia and its neighbourhood.

"An environment where 'might is right' and where the rules are set by powerful nations to their advantage is obviously more susceptible to conflict," she will say.

"I believe the test for our generation will be whether given the opportunity we defended and strengthened that rules-based order that had brought unparalleled prosperity and opportunity to humanity."

The address contains explicit concerns about the current trade policies of Australia's top strategic ally, the United States, and implicit warnings about the increasingly assertive China.

Members of the People's Liberation Army.Credit: Bloomberg

According to Ms Bishop, while the US will probably remain the world's only superpower over the next decade, the combined military spending of regional countries is likely to match or exceed the dominant American military budget for the first time in more than a century.

Figures from the Stockholm International Peace Research Institute show six of the world's 10 largest military budgets are found in Australia's region – namely the US, China, Russia, India, Japan and South Korea. Military budgets in the region have grown 5.5 per cent over the last financial year compared to 1 per cent globally.

On Tuesday, Fairfax Media reported China and Vanuatu have conducted preliminary discussions about a permanent Chinese military build-up in the South Pacific, which Australian officials believe could eventually become a fully-fledged military base.

In her address, Ms Bishop will also reiterate the government's concerns about the risk of a full-scale trade war triggered by US President Donald Trump's protectionist policies and hit out at the rise of "illiberalism" and authoritarianism across the world.

"We must ensure that nations do not fall for the temptation of ignoring international law and rules for narrow advantage and short-term gain. The rules-based order will quickly fray if it is perceived that advantage can be gained by flouting it or working around it," she will tell the Melbourne audience.

Her warning about obeying the rules comes in the context of the US undermining the World Trade Organisation, China flouting international rulings on the disputed waters of the South China Sea, and other nations violating human rights laws despite global condemnation.