Developing a shared Australia–Japan agenda for economic security

In 2025, the USSC Economic Security Program launched a project to develop a shared Australia-Japan agenda for economic security. The project was in response to a deteriorating free trade environment and harmful economic competition, including in areas such as energy security, the clean energy transition, advanced technologies, supply chain security, and critical infrastructure. It also recognised there were unrealised opportunities for Australia and Japan to work more closely on shared economic security challenges and develop stronger responses.

Between January and June 2025, the Economic Security Program convened two Track 1.5 workshops, one each in Tokyo and Canberra, and undertook private consultations with government, industry, academia, and other stakeholders. This report captures the key discussion points and views expressed by participants, along with their recommendations; it does not reflect academic research. As this report is a compilation of views expressed throughout the course of the project, it does not include references.

Discussions focused on key areas of overlap in Australia and Japan’s economic security challenges, with the ultimate goal of maximising collaboration and improving policy responses. Broadly, the project found that Australia and Japan have the most convergence of interests in areas including energy security, clean energy technologies, critical minerals supply chains, AI regulation, and critical infrastructure protection.

The project produced several recommendations for cooperation, including:

Trade architecture

• Promote the utility and ongoing relevance of global trade organisations and related dispute resolution mechanisms for countries, particularly small and middle powers.
• Encourage Southeast Asia to remain open and stable by promoting the benefits of free trade within initiatives such as the ASEAN Plus framework.

Energy security and clean energy technologies

• Consultation and early warning on national energy policy developments and more sub-national level engagement with international partners on policy developments.
• Continued cooperation on clean energy technology innovation, where national interests align.
• Subsidy transparency and predictability around clean energy investments to create a level playing field.
• Attract regional and global attention to Chinese clean energy subsidies that cause oversupply.

Critical minerals

• Support critical mineral miners and processors with long-term, patient capital (not just one-off investments), support during low-pricing periods, and expertise and technical assistance.
• Long-term grants, loans and other financial incentives for industry to make critical mineral-related downstream manufacturing economically viable.
• Australian Government to consider stronger public promotion of critical minerals as essential for national security and the clean energy transition to build public support for industrial policy.

Technology

• Prioritise a joined-up approach to AI policy through information-sharing and consultation to provide best-practice policy options for other countries to emulate.
• Leverage their credibility in international standards bodies to drive the development of standards, particularly around AI, that focus on technical details, not political interests.
• Australian Government to consider technology and economic security policy in a more integrated fashion to strengthen its policy responses across sectors.

If implemented, these actions stand to improve Australia and Japan’s responses to a growing number of growing economic security threats and strengthen their leadership position in global and regional forums.

Australian Ambassador to Japan, His Excellency Mr Justin Hayhurst, delivers opening remarks at the Australia-Japan Economic Security workshop in Tokyo, March 2025.

Between January and June 2025, the Economic Security Program convened two Track 1.5 workshops, one each in Tokyo and Canberra, and undertook private consultations with government, industry, academia, and other stakeholders.

Australia and Japan are increasingly confronted by economic security challenges

Amid rising geopolitical tensions and disruptive technological innovations, countries are increasingly turning to the use of economic tools to further their political and strategic goals. For example, in recent years, China has restricted trade with other countries through export controls and import bans, Russia has withheld gas supply to Europe over its sanctions, and the United States has implemented sweeping industrial policy, technology export controls and tariffs. Global trends point to a shift away from free trade and comparative advantage towards economic competition and decoupling. As two free-trading nations, these trends run counter to Australia and Japan’s national interests, requiring effective public policy and private-sector responses.

For both Australia and Japan, economic security is national security. Australia’s economy and related domestic capacity depend on its ability to export goods, and Japan’s food, energy and autonomy depend on its access to imports. Australia and Japan’s economies are highly complementary, with shared interests in a well-functioning global economic system. However, a breakdown in the global free trade order, supply chain disruptions in energy and raw materials, artificial intelligence (AI) deployment and diffusion, and critical infrastructure vulnerabilities all present Australia and Japan with profound and complex challenges. Due to the cross-cutting nature of these challenges, no single country can solve these problems alone. A collective approach is needed, and Australia and Japan are two of the most closely aligned and capable nations to respond. In this context, this report seeks to identify a shared Australia-Japan agenda for economic security cooperation.

In October 2024, Japanese Prime Minister Shigeru Ishiba and Australian Prime Minister Anthony Albanese held a summit meeting in Laos on the sidelines of the ASEAN-related summits, discussing Japan-Australia cooperation amid growing regional challenges.Source: Ministry of Foreign Affairs of Japan

Australia and Japan’s government systems, economic security policies and priorities

Government systems and economic security policies

Australia and Japan can learn much from one another in developing responses to economic security challenges. Through Japan’s experience of economic coercion by China in 2010,¹ Japan has adapted and strengthened its resilience to these types of challenges. Japan legislated a 2022 Economic Security Promotion Act (see figure 1), appointed a Minister for Economic Security and successfully intervened in its domestic market via industry policy. Japan has made significant investments in supply chain resilience, strategic technologies and advanced manufacturing. Its economic security policy is guided by three principles: “promote, protect, partner”. As part of this framework, the Japanese Government invests domestically to promote Japanese industry; creates legislation and regulation to protect Japanese infrastructure and supply chains from foreign interference and coercion; and pursues partnerships with like-minded nations.

The Australian Government and private-sector response to economic security challenges is more recent and has been less structured than Japan’s response. Australia has no formal legislation or a dedicated minister or agency that oversees economic security. Multiple Australian exporters faced economic coercion from China, particularly between 2020 and 2024. Despite this experience, rather than diversify trade away from China as Japanese industry has done, Australian companies have chosen to rely on finding new export markets during disruptions and not 'leave profits on the table' today. However, the Australian Government has sought to encourage trade diversification within its economy, such as through a dedicated trade strategy towards Southeast Asia. The government has also established an Office for Supply Chain Resilience to address supply chain vulnerabilities and bolstered its export finance agency through increased funds and powers. Further, the Australian Government has recently re-embarked on the industrial policy, "Future Made in Australia" (FMIA) (see figure 1), and is in the process of improving its economic competitiveness.

Australian officials and stakeholders across sectors acknowledge that the Australian Government needs to continue building capacity to respond to economic security threats like coercion and supply chain disruptions. This includes adopting a whole-of-government approach and speeding up response times and processes. While there is acceptance within Australia of the need to improve, there remain differences of opinion between Australian Government departments and among economists and security practitioners about the relative values of the trade-offs involved. Because China is Australia’s largest trade partner, accounting for a third of Australia’s export market, some economists do not want to compromise this relationship in support of national security objectives. In Japan, however, there is stronger convergence between different government agencies and sectors because they see economics and security as indivisible — they are one and the same.

Japanese participants who engaged with this project perceive Australia as ahead of Japan in responding to foreign interference and conducting investment screening and reporting. For instance, Australia was the first country to defend against the potential for foreign interference in its national telecommunications system by banning so-called ‘high-risk vendors’, including Chinese companies. In contrast, Japan employs Chinese telecommunications systems in its national infrastructure. Japanese participants also saw Australia as stricter on screening foreign nationals seeking to develop sensitive research at Australian institutions.

Australia and Japan should see industrial policy not as protectionism but as ‘strategic policy’ and an ‘insurance policy’.

Project participants discussed Japan and Australia’s individual economic security measures, including their industrial policy approaches. Where Japan’s domestic investments aim to make Japan ‘strategically indispensable’ in global supply chains, Australia’s industrial policy is more inwardly focused on achieving the energy transition and economic security. One view expressed was that, in the current geopolitical context, Australia and Japan should see industrial policy not as protectionism but as ‘strategic policy’ and an ‘insurance policy’. While Australia needs to grow more comfortable with paying the ‘insurance premium’ of its new economic security policies, it can share the costs with other partners like Japan through friend-shoring. Australia and Japan’s industrial policies are not in competition because they focus on different industries, and FMIA will complement Japan’s priorities and programs.

Figure 1. Central coordinating agencies for economic security

Figure 1. Central coordinating agencies for economic security, in the Australian and Japanese governments

Economic security priorities

There are four main economic security challenges that can act as a starting point for building a shared Australia-Japan agenda for economic security. These include:

• energy security, including clean energy technology and manufacturing;
• critical minerals to underpin clean energy as well as advanced technologies and defence applications;
• technology regulation to safeguard their societies; and
• secure critical infrastructure both domestically and in their immediate region.

Australia and Japan share several more economic security goals; however, these four emerged in policy documents, private consultations and workshops as having the greatest overlap in interest and urgency. Distilling Australia and Japan’s shared economic security priorities down to a core few can serve to focus official and private-sector attention towards bilateral issues with the greatest scope for cooperation.

Figure 2. Economic security priorities

Figure 2. Economic security priorities

A country’s economic security priorities are unique and depend on a variety of factors.² Japan is a geographically small archipelago, dependent on imports, with a large workforce, and highly advanced manufacturing and technology capabilities. These characteristics predispose it to prioritising import security (food and energy), further investing in critical technologies and manufacturing to maintain its edge, protecting its commercial knowledge, and fostering a resilient and informed business community. Australia’s circumstances are different. It is a geographically large island nation with plentiful natural resources, an economy mainly comprised of small and medium enterprises and is a technology ‘importer’ rather than exporter. Australia’s priorities include economic diversification (both in terms of trade partners and exports), cybersecurity to protect small businesses and critical infrastructure, technology regulation and controls and sufficient fuel reserves for domestic transport. Furthermore, Australia and Japan have several additional economic security priorities that overlap with one another (see figure 2).

Distilling Australia and Japan’s shared economic security priorities down to a core few can serve to focus official and private-sector attention towards bilateral issues with the greatest scope for cooperation.

Navigating a new economic security era: Australia and Japan’s perspectives and approaches

Australia and Japan recognise they are facing a deteriorating geopolitical environment and tougher economic and security decisions and trade-offs. The two countries are ideologically and practically aligned on economic security challenges and are looking to work more closely together. As a starting point, they are eager to share information and best-practice responses to navigate this new era, but their broader ambition is practical cooperation.

Australia and Japan are well positioned to cooperate because they have a trusted relationship. Trust is built through transparency and clear rationale behind policy actions, which is seen as lacking in current US policy. One participant said that Japan sees the Australia-Japan relationship as the “axis of having a secure and stable economic relationship based on trade.” Together, Australia and Japan need a collectivist approach with other trusted partners to respond to growing economic security threats.

Challenges from China and the United States

Australia and Japan face unprecedented economic security challenges from China, as well as the United States, that will force them to act decisively to protect their own national interests. While the challenges posed by both countries are different in nature and severity, both present significant obstacles to overcome. However, due to globalisation and deeply integrated supply chains, developed countries around the world are in a “trap of interdependence”, where no country is fully autonomous — not even the United States or China. This means that all countries have vulnerabilities in areas where they are dependent on exports, and, therefore, there are still some constraints on US-China economic competition.

Both Japan and Australia see China as a strategic threat but they perceive its risks differently. To Japan, China is a threat that needs to be thoroughly mitigated, including through creating non-Chinese supply chains and demonstrating a strong commitment to trade diversification, backed by government support. To Australia, China is its primary export partner and irreplaceable in some trade and supply chains. While Australia shares Japan’s goal of diversifying supply chains and moving trade away from China, Australia sees more scope for Chinese involvement when compared with Japan. Australia and Japan agree on the goal but differ in their degree of derisking from China.

Breakdown in the global free trade order and norms

The open global trading system has been a source of security for Australia and Japan which was hard fought and won, and they must work to uphold it. Both are committed to working within the international rules-based system and making reforms to existing mechanisms, rather than starting anew. For instance, they are interested in reforming the World Trade Organization (WTO), where possible, to improve its ability to enforce trade rules. One task for Australia and Japan is to demonstrate the value of participation in the WTO and adjacent mechanisms, including its multi-party interim arrangement for dispute settlement. While the WTO is not perfect, it still serves the interests of middle powers like Australia and Japan and provides a framework to address global, all-encompassing challenges like the clean energy transition.

Multilateral regional trade groupings also play a key role in helping shape the global system and diffuse rules. Organisations such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership are seen as potential mechanisms to spread economic rules and norms that address emerging economic security issues, in line with Australia and Japan’s interests. Further, some project participants viewed increasing protectionism in Southeast Asia as a significant challenge. Australia and Japan should encourage this region to remain open and stable, including by promoting the benefits of free trade within initiatives such as the ASEAN Plus framework.

Developed countries around the world are in a “trap of interdependence”, where no country is fully autonomous — not even the United States or China.

One task for Australia and Japan is to demonstrate the value of participation in the WTO and adjacent mechanisms, including its multi-party interim arrangement for dispute settlement.Source: Getty

Comparing Japanese and Australian public-private engagement

One of the clearest distinctions between Australia and Japan’s economic security approaches is their different styles and depths of engagement with the private sector. The Australian Government lacks a history of close partnerships with industry and, while it is taking steps to work more closely with business, a lack of trust between both sides is an issue. Conversely, Japanese officials have long understood the importance of strong public-private partnerships (PPPs) and are as transparent as possible with industry to build trust, as otherwise, “we [Japan] can’t use industry” to further government policy. The Japanese Government and private sector work hand-in-hand to address economic security challenges.

Strong Japanese PPPs are achieved through government consultation and surveys with the business community and the co-design of industrial policy, subsidies, and export and import controls. Private-sector employees are also seconded into Japanese government agencies, such as the Ministry of Economy, Trade, and Industry (METI), to learn about economic security risks from the inside. In contrast, the Australian Government’s approach has often been to launch new policy initiatives and then seek public and industry input. For instance, in early 2025, the Australian Government announced plans for a critical minerals strategic reserve and later followed up with plans to establish a 12-month taskforce to develop the concept. Some project participants expressed the view that announcing new policies without prior consultation can take industry by surprise and risks putting some business partners offside, making it hard for businesses to have the confidence to make investments due to uncertainty about the future.

Where Japanese companies see economic security as their problem and something to derisk, Australian companies see economic security as a political problem for government and have not comprehensively diversified.

The Japanese Government lists the benefits of early private-sector engagement as increasing public understanding, incorporating real-world implications, and providing transparency and predictability for business. The downside of Japan’s consensus-building approach is that the policy process takes longer. While there are advantages and disadvantages to both Japan and Australia’s methods, given Tokyo’s achievements in industrial policy and PPPs, Canberra might consider earlier dialogue with industry partners before publicly canvassing policy options. Greater consultation and co-development of policy ideas, regular information sharing, and industry secondments into government could further Australia’s economic security goals, but this would also require the government to accept higher levels of risk.

Building trust and cooperation between the Australian Government and industry will take time. Where Japanese companies see economic security as their problem and something to derisk, Australian companies see economic security as a political problem for government and have not comprehensively diversified. This is partly a function of how Japanese and Australian companies have been economically coerced in different ways — Japanese companies were prevented from gaining access to critical inputs from China and had limited other options, and blamed Beijing; Australian companies were prevented from selling their products to China but, in most cases, found other markets and blamed Canberra for tensions. Where Japanese companies have diversified, by-and-large, Australian companies have returned to exporting to China, in some cases, in higher quantities than before the economic coercion.

Sectoral areas for Australia-Japan economic security cooperation

Energy security and clean energy technology

Energy security, specifically gas trade, is a cornerstone of the Australia-Japan economic security relationship. Japan is dependent on Liquified Natural Gas (LNG) for electricity, heating and industrial output, and in 2023, 40% of Japan’s LNG came from Australia. While Australia-Japan gas trade is robust, changes in Australian domestic policy have undermined Japanese perceptions of Australian reliability as an energy partner. This includes the Australian Government’s adoption of greenhouse gas emissions limits for industrial facilities (which could limit its energy exports), delays to previously approved gas projects, and unilateral decisions by state governments to redirect gas production domestically and withdraw green hydrogen funding.

While the Australian Government has made multiple private and public reassurances to Japan regarding the security of supply, Japan is not as confident in Australia’s energy trade today as it has been in previous years. Confidence could be rebuilt by the Australian federal and state governments providing Japan with early warning and greater transparency over decision-making. Given Japan’s history of investment and offtake, some project participants recommended that the Australian Government give Japan adequate consideration and an opportunity for consultation in future. One participant even suggested that energy policies should be created in tandem.

On renewable energy, both Australia and Japan share the goal of net-zero emissions by 2050, and clean energy technology is seen as an obvious field for cooperation. However, the technological pathway to achieving net zero is uncertain, and there are subtle differences in Australia and Japan’s approaches to clean energy technology. Hydrogen is one example.

Australia and Japan have had a strong track record of cooperation on hydrogen. Yet, Australia is currently more focused on developing frontier technologies such as green hydrogen and ammonia, while Japan is pursuing foundational technologies like hydrogen storage and transport. Australia is unlikely to realign with Japan to co-develop storage and transport systems because a breakthrough on green hydrogen could give Australia a comparative advantage. Due to unexpected additional costs and delays with hydrogen production and technology, Australia is also redirecting some of its resources to green steel and green iron. These subtle differences create some mismatches in the two governments’ priorities and resource allocations, which have slowed bilateral cooperation.

There are also slight differences between Australia and Japan in their depth of threat perception of China’s dominance over clean energy technologies and manufacturing, and the implications. Japan is highly attuned to China’s monopoly position in clean energy supply chains and Chinese overcapacity, with its solar, wind, EV batteries and other goods outpacing global demand. While Australian participants understood that dynamic, on balance, they seemed more focused on addressing the technical challenges around clean energy production at scale and more concerned with the cost to transition Australia’s economy in the context of demographic challenges and other national expenses, like defence. This suggests that China’s monopoly in clean energy technologies may not be the main factor that drives Australia-Japan cooperation on clean energy.

Energy security, specifically gas trade, is a cornerstone of the Australia-Japan economic security relationship. Source: Getty

Critical minerals supply chains

When China withheld rare earth element trade from Japan in 2010, the Japanese Government made the decisive move to partner with Australian company Lynas Rare Earths. The Japan-Lynas example provides a case study of a successful PPP to reduce Japan’s strategic dependency in the face of economic coercion. Japanese government officials and Lynas attribute their success to comprehensive cooperation across all facets of the rare earths supply chain for several years. This included long-term, patient capital, financial assistance through long periods of low rare earth pricing, co-development of infrastructure assets, guaranteed demand for end-products and technical support across all stages of development. As a result, Japan reduced its dependence on Chinese rare earth supplies from 80–90% in 2011 to below 60% today.

Australia shares Japan’s goal of diversifying critical minerals supply chains, but where Japan’s primary objective is security of supply, Australia’s primary objective is security of demand. Most Australian critical minerals — and up to 90% of lithium exports in 2022 — are exported to China for processing. To address that imbalance and value-add to its own national endowments, Australia is seeking to become a processor, not just exporter, of critical minerals.

While Australia and Japan present as highly compatible partners on critical mineral supply chains, as with energy security, there are subtle differences in their approaches. Where Japan views any China-controlled node within the supply chain as a single point of failure and is pursuing non-Chinese supply chains, Australia’s emphasis is not on decoupling from China but on building redundancy into the system. Japan’s experience of economic coercion by China left a lasting impact, whereas China is Australia’s largest minerals purchaser, and Australia needs Chinese investment to mine the raw materials needed for the clean energy transition. As such, Australia and Japan have different risk profiles of China, with both countries exposed to opposite ends of the critical minerals supply chain and different pressures.

Where Australia and Japan are completely aligned is the need to cooperate with each other and other like-minded countries to diversify critical minerals supply chains overall. Strategic partnerships are key, and possibly the only way, to address supply chain vulnerabilities. For example, a strategic partnership between Australia, Japan and like-minded partners could support co-investment in infrastructure, sharing technical capability and leveraging multiple stockpiles to fill short-term gaps. Most importantly, a strategic minerals grouping could help protect against China’s non-market measures by providing floor and ceiling prices and offtake guarantees to stabilise the supply chain.

Aside from Australia-Japan critical minerals cooperation, discussions revealed several key takeaways for Australia specifically. Regarding Australia’s proposed critical minerals reserve, which could act as a stockpile for its partners, participants suggested the Australian Government more strongly make the public case for critical minerals mining and processing as integral to national and economic security to validate public spending on the reserve. There was also recognition by participants that, for Australian minerals to reach the global market at pace with competitor products, the Australian Government needs to speed up its approvals process and reassess its environmental benchmarks or risk losing comparative advantage. A further recommendation was that the Australian Government provide long-term incentives for industry to make downstream manufacturing economically viable. An example of this could be giving tax credits to original equipment manufacturers (OEMs) that purchase Australian magnets.

Lynas Rare Earths’ processing plant in Kalgoorlie, in Western Australia’s Goldfields region. When China withheld rare earth element trade from Japan in 2010, the Japanese Government made the decisive move to partner with Lynas.Source: Lynas Rare Earths

AI models, advanced technologies, and technology policy

Across both AI and broader technology policy, Australia and Japan share similar high-level challenges and ambitions. But, influenced by their different economic conditions and makeups, Australia and Japan have responded differently to this area of policy. Japan is a highly technologically advanced society that excels in robotics, advanced materials, manufacturing and semiconductors, and technology policy is seen as integral to economic security. In contrast, Australia treats technology policy and economic security policy as somewhat separate, discrete areas — with its technology policy centred on AI regulation, critical infrastructure and cybersecurity. Despite their different approaches, opportunities do exist to collaborate on a targeted set of issues.

Both countries face a common challenge in their approach to governing AI's development, deployment and diffusion. AI is an area of rapidly evolving technological capability that Australia and Japan must navigate. This includes controlling for the potential downside risks of AI (safety, bias and security concerns) while maximising economic benefits.

In Japan, AI is one of the highest priorities within its economic security policy apparatus — integrating issues of critical minerals, semiconductor manufacturing, and domestic and international AI diffusion. Japan has issued significant guidance to its industry and society regarding AI and, in May 2025, legislated a new AI Bill — the Bill on the Promotion of Research, Development, and Utilization of Artificial Intelligence-Related Technologies. Initially, the Bill’s emphasis had been on enshrining AI safety, but the final law focuses on voluntary compliance and boosting innovation and business uptake of AI while addressing risks.

Another priority for Japan is recapturing its position as a world-leading semiconductor producer. Japan has committed ¥10 trillion (US$65 billion) to modernising its domestic industry and attracting companies such as the Taiwan Semiconductor Manufacturing Company to onshore production. As part of this, Japan has invested ¥1.72 trillion (US$11.5 billion) in startup Rapidus to develop advanced 2-nanometer chips. If successful, it would be the fourth company globally to do so. Participants noted that Japan’s commitment to Rapidus is “a strategic policy to define what the state wants to be — a political determination — to put funding into the industry to make the difference to be a top-tier player.” It was noted that this project should not be measured in typical industrial policy terms (seeking to address a market failure) but as an aspirational push to compete globally.

Another priority for Japan is recapturing its position as a world-leading semiconductor producer. Source: Getty

While Japan is making bold technology investments to re-establish itself as a global leader, Australia’s AI policy is centred on building trust and AI adoption to address lagging productivity, boost its economy, and grow its software sector by innovating in the ‘application’ layer. To date, Australia has taken a risk-based approach, launching a Voluntary AI Safety Standard in September 2024 alongside proposed mandatory guardrails. Since the launch of the AI Safety Standard, the Australian Government has consulted heavily but not released any new formal AI strategy or legislation, although a more definitive AI policy is expected later in 2025. During this period of deliberation and planning on Australia’s AI policy, consultation with countries like Japan is critical.

Both Australia and Japan share a vested interest in the economic and national security implications of how AI is disseminated in their region. They are concerned by the widespread diffusion of AI from high-risk vendors, specifically China, into the economies and infrastructure of their neighbouring countries. Forums and opportunities for collaboration and action are extensive: Japan established the G7 Hiroshima AI Process, with Australia participating in the associated Friends Group, and both are active members of the Quad. Beyond supporting efforts to produce cost-competitive (if not necessarily frontier) AI models that appeal to the region, Australia and Japan can also provide partner nations with risk assessments and advice on potential security concerns regarding different models.

By presenting a joined-up approach to AI policy regionally and internationally, Australia and Japan can also shape the norms and policies of third-party countries. Both have prominent roles in international standards development organisations and can inform the common language and baselines for AI policy globally.

By presenting a joined-up approach to AI policy regionally and internationally, Australia and Japan can also shape the norms and policies of third-party countries.

Just as Australia can learn from Japan’s evolving AI regulation, participants recognised Australia’s strengths in other areas of technology policy, including information and cybersecurity and the protection of critical infrastructure. In Japan, while the nation continues to strengthen its security clearance system, there remain concerns over IP theft and information security — a point made by multiple participants. Australia itself has undergone recent export controls reform, including accounting for emerging technologies like quantum computing, leading to tightened security at research institutions and new lessons for information management. With specific structures already in place for information-sharing, including the sixth Japan-Australia Cyber Policy Dialogue in March 2025, the right framework for stronger collaboration is in place. As each country’s technology policy — including on AI — evolves, Australia and Japan can continue to learn from one another.

The path forward and recommendations

As large, developed economies move towards a more competitive trade and economic footing, Australia and Japan are fortunate to have one another as partners. They agree on the core issues: the need to support a rules-based trade system, reinforce economic agency and build economic resilience to shocks. They are like-minded, trusted partners and their economies are well suited to complement each other rather than compete. While Australia and Japan have a complementary relationship, they should not replicate each other’s methods but, instead, draw learnings. Australia can learn from Japan’s example of building government capacity to respond to economic security challenges and its joined-up approach with industry; Japan can observe Australia’s information security management and foreign investment screening. Moreover, with more regular information exchange and policy coordination, they will be better placed to respond to shared challenges in a dynamic economic security environment.

As large, developed economies move towards a more competitive trade and economic footing, Australia and Japan are fortunate to have one another as partners.

There are also areas for improvement. To avoid either country surprising the other, policy developments need to be clearly communicated in advance and better designed with the other in mind. Both seek transparency and stability in the relationship, which mirrors the relationship the private sector seeks with government. Further, while Australia and Japan agree on the fundamental challenges, due to their different economies, they differ in their responses. This narrows the aperture for cooperation but also serves to highlight clearer channels for cooperation.

Recommendations for cooperation:

Trade architecture

• Promote the utility and ongoing relevance of global trade organisations and related dispute resolution mechanisms for countries, particularly small and middle powers.
• Encourage Southeast Asia to remain open and stable by promoting the benefits of free trade within initiatives such as the ASEAN Plus framework.

Energy security and clean energy technologies

• Consultation and early warning on national energy policy and more sub-national level engagement with international partners, like Japan, on policy developments, including through enhanced bilateral government-business consultation mechanisms.
• Continued cooperation on clean energy technology innovation, where national interests align.
• Subsidy transparency and predictability in relation to clean energy investments to create a level playing field.
• Attracting regional and global attention to Chinese clean energy subsidies that cause oversupply.

Critical minerals

• Support critical mineral miners and processors with long-term, patient capital (not just one-off investments), maintaining course through low pricing periods, and expertise and technical assistance.
• Long-term grants, loans and other financial incentives for industry to make critical mineral-related downstream manufacturing economically viable.
• Australian Government to consider stronger public promotion of critical minerals as essential for national security and the clean energy transition to build public support for industrial policy.

Technology

• Prioritise a joined-up approach to AI policy through information-sharing and consultation to provide best-practice policy options for other countries to emulate.
• Build on their prominent role in international standards bodies to drive the development of standards, particularly around AI, that focus on technical details, not political interests.
• Australian Government to consider technology and economic security policy in a more integrated fashion to strengthen its policy responses across sectors, similarly to how the United States, Japan and others are responding.

This project has revealed areas of convergence and divergence between Australia and Japan in their economic security approaches. Importantly, it has identified specific initiatives for their governments and industry to consider and take forward.

In many cases, their systems are already working more closely to enhance their policy responses, including through a regular Track 1 Australia-Japan Economic Security Dialogue. Given that business, financiers and civil society groups are essential to developing solutions to these cross-cutting challenges, the governments of both nations could benefit from the establishment of regular Track 1.5 and Track 2 dialogues as well.

Through a commitment to information sharing and engagement across levels, Australia and Japan could have much to offer the Indo-Pacific and wider world in demonstrating how to navigate this new economic security era.

The Economic Security Program’s Track 1.5 workshop in Tokyo.