Read on Twitter
Today @PerthUSAsia launches ‘Adapting Australia to an era of geoeconomic competition’. We argue that geoeconomics - the application of economic instruments to geopolitical ends - will be a major challenge for Aus FP in coming years. /1 http://www.perthusasia.edu.au/our-work/geoeconomics-report
Geoeconomic contests are a defining feature of 21st century international politics. Trade warfare, investment races, and competitive institution-building are now commonplace. Many governments are deploying geoeconomic weapons for strategic gain. /2
Geoeconomics poses many risks for Aus. As a very open economy, its wealth and security depends on trade and invest links to the world. And as a medium-sized country, it lacks the heft to “fight with heavyweights” in geoeconomic battles. /3
Nor is Aus “tooled up” for geoeconomics. Its open and liberal foreign economic policies have worked well during past periods of cooperation. But in an era of economic warfare, new policy settings are required to manage risks. /4
Aus also suffers from a distinct lack of diversity in its economic ties, which depend heavily on a very narrow set of commodities and partners. This leads to dependence that magnifies geoeconomic risks. /5
Aus has been the victim of geoeconomic coercion. In 2020, PRC applied trade sanctions to 13 Australian industries in reprisal for diplomatic positions on COVID, SCS and HK. This affected $54b of exports to China. /6
It has also been collateral damage in the battles of others. During the US-China trade war, Trump’s tariffs on $35b of Chinese steel and aluminium were an indirect tariff on $57b of Aus resource exports to China. /7
Aus has also been drawn into regional competitions, as it has responded to China’s BRI with its own “Pacific Step Up” program. Aus and China are now direct competitors in regional infrastructure diplomacy. /8
Business-as-usual policy settings are not calibrated to address the challenges of geoeconomic competition. We identify five steps Aus needs to take to adapt its FP for the geoeconomic era. /9
1st: Diversify trade and investment ties. If concentration amplifies risk, diversity adds resilience. This will minimise exposure to geoeconomic coercion. /10
2nd: Invest in defensive capabilities. Aus needs to develop both domestic and international strategies to manage the costs that geoeconomic coercion imposes when it next occurs. /11
3rd: Use geoeconomics proactively. Australia is the sixth largest economy in the Indo-Pacific, and has the scale to use its economic diplomacy to shape the strategic regional environment. /12
4th: Build minilateral coalitions. International coalitions are a force multiplier for diplomacy, and Aus does best working with friends. Given geoeconomic conflicts at play today, these are likely to be minilateral in scope. /13
5th: Change how we make FP. Geoeconomics poses complexities that go beyond the preserve of Defence or DFAT. Many government agencies need to be in the room; as do businesses – the front line troops of geoeconomics. /14
You can download “Adapting Australia to an era of geoeconomic competition” here. /15 http://www.perthusasia.edu.au/our-work/geoeconomics-report
Or join our launch event with @NSC_ANU at 6pm AEDST webcast here. /16 https://twitter.com/NSC_ANU/status/1360082004184887300
