Now, down to business

THE Australian visit of Shinzo Abe tightens our ties with Japan.

PM Abbott Japan 7th April

IT was a friendship forged over a set of Shimano bike gears, and things have meshed nicely together ever since.

When Shinzo Abe played host to his cycling-mad counterpart Tony Abbott, his thoughtful gift was reciprocated by Australia’s presentation of a historic photo album featuring Abe’s politician grandfather.

That set the scene for the final­isation of the Australia-Japan free-trade deal, almost 60 years after the historic first economic agreement between the countries, signed by Abe’s grandfather Nobusuke Kishi and Robert Menzies.

Even before then, our Prime Minister had paved the way for tighter ties by nominating Japan as Australia’s closest friend in Asia and firmly backing Abe’s push to change the constitution to give his military the ability to fight abroad.

As it stands, Japan’s troops are restricted to peacekeeping roles, except on home soil, under the post-war pacifist constitution drafted under US occupation.

From today, Abbott will play host to a leader he can now count as a firm political friend and the visit will cement the growing economic, military and political ties between the two countries as Abe is afforded the chance to address the Australian parliament.

The Japanese PM’s main task will be to sign in Canberra the free-trade agreement which was concluded as Abbott flew in to Tokyo to launch his successful North Asian tour in April.

Then it’s down to business.

Abe will be accompanied by a large business delegation who together represent companies with a total net worth the size of Denmark’s annual GDP. They will be part of a business lunch in Canberra and will accompany Abe to the dinner with Abbott in Canberra.

During the Canberra leg of the trip, Bill Shorten and Governor-General Peter Cosgrove will also greet the Japanese PM, who will also visit the Australian War Memorial and lay a wreath at the tomb of the Unknown Soldier.

After leaving Canberra, Abe will visit Rio Tinto’s iron operations in the Pilbara, where Japan­ese investment bankrolled a major industry for Australia and Japan’s technology is now used in driverless trucks that help mine the ore.

On the strategic front, Tokyo now views Canberra as its second-most important security partner after the formal ally of both countries, the US. This was affirmed at a meeting in Tokyo last month of the countries’ foreign and defence ministers. Trade and Investment Minister Andrew Robb tells The Australian,“the fact we were able to strike such an economic deal, the most ambitious that Japan has ever entered into, underlines the strength of our relationship”.

It took strong political will, he says, finally to conclude it after negotiations that stretched back to 2007. Robb says free-trade deals with South Korea and Japan are done and China, the third and toughest target set by Abbott for this year’s trade trifecta, is within reach. He praises Abbott’s “strong backing of such an ambitious trade and investment agenda”.

Robb says it is fitting that Abe will oversee the conclusion after his grandfather Kishi signed the countries’ original, landmark commerce deal with Robert Menzies in 1957. He says the new deal is “the most liberalising trade agreement that Japan has ever concluded — providing Australian exporters, importers, investors and producers a significant advantage over their international competitors”.

Others counsel caution, saying the devil could be in the detail. The full text — which has been pursued for several weeks by opposition trade spokeswoman Penny Wong — is expected to be tabled in parliament early next week.

But, for now, business is giving the deal its firm embrace. Wesfarmers’ chief executive Richard Goyder describes the deal as “great for jobs and the economy. Japan is a very important market. It again reinforces Australia’s credentials as a trading nation”.

Gary Dawson, the chief executive of the Australian Food and Grocery Council, and Brendan Pearson, chief executive of the Minerals Council, both anticipate the deal will boost exports to Japan from their sectors.

Peter Davis, the chief executive of ANZ Japan, says the agreement “is already enhancing the business environment between (the countries).”

Victor De Bortoli, export manager at De Bortoli Wines, says wine exporters have been under pressure, “holding volume but losing value. This deal gives us the ability to claw back sales.”

Abe, who tomorrow will become the first leader of his country to address a joint sitting of parliament, is coming straight from taking two major, though controversial, strides back home.

He announced details of his “third arrow” of economic measures — his structural reform plan with 249 measures. They are chiefly aimed at reforming by liberalising three especially conservative sectors — farming, the health service and the labour market — in a bid to build on the fiscal and monetary stimulus he unleashed on global markets.

He also foreshadowed legislation to enable the Japanese milit­ary to fight alongside friends and allies overseas, if the latter are attacked and if Japan too is perceived to be threatened — superseding the constitutional pacifism introduced after World War II. The Australian government issued a statement welcoming the change as “allowing Japan to make a greater contribution to international peace and stability”. Japan could now respond in the event of an armed attack against a close partner.

The foreign and defence ministers of the two countries issued a joint statement after their recent Tokyo meeting, saying their strategic partnership would be elevated “to a new special relationship based on common values and interests including democracy, human rights, the rule of law, open markets and free trade.”

They concluded an agreement for co-operation over defence technology, with Australia considering buying submarine equipment — or even, later, complete submarines — from Japan.

The strategic relationship is clearly blossoming in the eyes of the two countries’ governments, even if some in security circles have misgivings about acceding too easily to the wishes of either Tokyo or Washington.

The US 7th fleet still provides an effective guarantee of freedom of movement on the high seas in Asia, but countries in the region have eyed the US budgetary situation and begun to take on greater responsibility for their own defence amid a rising China that is rapidly modernising and re-equipping its military.

The US would dearly love its two key allies in North Asia, Japan and South Korea, to rebuild their shattered relationship. But Abe’s clumsy and dogmatic revisionism over the forced sexual enslavement of women on the Korean Peninsula at the hands of Japan’s Imperial Army has put paid to that for now.

Both China and South Korea — Australia’s first- and third-biggest buyers of exports, with Japan second — have strongly condemned Abe’s move to empower the military, and both refuse to hold talks at a senior level with the Japanese government.

Ties between Japan and China remain at a dangerously low level, with the dispute over the Senkaku (known in China as the Diaoyu) Islands scotching all high-level contact between the two countries.

Australia, meanwhile, continues to preserve close ties with all parties, but how long it can continue to walk this delicate tightrope, with China the country’s main trading partner and Japan and the US its main strategic partners, remains to be seen. So far, though, like the shiny Shimano gearing on Abbott’s bicycle, there’s no looming sign of falling off.