Today’s Anthony Albanese-Sanae Takaichi leaders’ summit marks a turning point for the Indo-Pacific. Japan and Australia have emerged as the regional leaders in responding to economic security challenges emitting from China and the wider world.
The joint declaration commits Australia and Japan to consult on economic security contingencies and consider measures in response — alluding to the potential for joint action to counter economic coercion.
As the world grapples with China’s economic coercion, US tariffs and trade quid pro quo, and Russia and Iran’s energy ransoming, more countries are likely to look to Australia and Japan’s response and seek their leadership.
Australia and Japan are fortunate to have an already robust bilateral partnership on which to base stronger economic and security co-operation. Their economic complementarities — Australia’s resource-led economy and Japan’s import-led growth — and shared mindset — same US ally, same adversaries, same region — makes their relationship unique and highly valuable in turbulent times.
Japan is a global-first mover in navigating disruptive global trade trends. Australia is both learning from and building on Japan’s model.
In 2021 Japan appointed a minister for economic security. This was the first cabinet position for this issue globally and a role previously held by Takaichi. Japan then legislated an Economic Security Promotion Act, giving it greater powers to secure its supply chains, critical infrastructure and technology and patents.
The Japanese government also adopted a conceptual framework to help it and its private sector navigate multiple overlapping challenges: the “promote, protect, partner” framework, or 3Ps.
Now would be the worst time to inject instability into Australia’s energy partnerships.
The 3Ps are about promoting Japan’s industry and technology; protecting its supply chains, critical infrastructure, and technology leakage; and forming alliances with like-minded countries. While Australia hasn’t explicitly adopted the 3P framework, like the EU has, Canberra is making progress across the three pillars.
On protection, Australia has sophisticated foreign investment screening, which other countries — including Japan — look to for guidance.
On the promote side, the Future Made in Australia industry policy will invest multiple billions in renewables, minerals and breakthrough technology like quantum.
In the partnership category, Australia has been working ever closer with Japan, particularly on critical minerals, regional trade architecture – like the CPTPP – and the resources sector.
On this last point, Australia’s energy trade with Japan and Asia more broadly is in the spotlight given the global gas crisis and the domestic cost-of-living crisis. While the Albanese government is facing pressure to implement a gas export tax and a national debate on the subject is warranted, now would be the worst time to inject instability into Australia’s energy partnerships.
In this new world of economic statecraft, where countries are using their economic advantages as strategic leverage, Australia cannot afford to lose ground by casting doubt on the reliability of its energy trade to Asia.
In fact, Australia should learn from another Japanese concept: “strategic indispensability”. Australia should reinforce its essential role in providing gas to Asia, making the country’s security and trade goods necessary for the security of other countries.
While fully transitioning to clean energy remains the long-term goal, right now energy security must be seen in the broader context of global economic contestation. The trade relationships Australia can strengthen now, particularly with Japan and Asia, will give us the international support structure we need to withstand the harsh economic and security headwinds headed our way.
Meanwhile, Japan keeps innovating its economic security approach to keep pace with new challenges.
Following Takaichi’s visit, her LDP government is expected to release a long-anticipated update to its economic security law and strategy. Early reports suggest the revisions will emphasise strengthening Japan’s domestic industry against future emergencies and developing countermeasures with like-minded countries, including Australia.
Today’s joint Australia-Japan declaration is a necessary and welcome step that could be reinforced by Australia developing more formalised economic security engagements with other countries. Top of the list should be the US, UK, EU, Canada, South Korea, India and key South-East Asian partners. While there is much Australia and Japan can and are doing bilaterally – such as diversifying rare earth chains – they can’t do it alone.
Both need other aligned partners to fully solve for problems related to critical minerals, energy security, trade rules and norms and AI diffusion and infrastructure.
Albanese and Takaichi’s next challenge will be demonstrating their ability to form country coalitions around the core economic security challenges of this decade and next – and responding collectively to confront them.