Australia and Japan have fared better than most countries that have been afflicted by the COVID pandemic of 2020.  Challenges remain, especially in the period before vaccinations have been widely administered, but hopefully a situation close to normal can resume in 2021.

In terms of the bilateral relationship, everything remains normal: the strategic relationship continues to grow stronger; the flow of Japanese investment into Australia continues to be enormous; Japan remains Australia’s second largest trading partner; the two countries have built on their success in the revived TPP by being major movers in the RCEP agreement; and they continue to find new sectors for cutting edge collaboration such as space and hydrogen.

While there is some discussion in various international relations forums about potential new administrations and the need for resets, this does not apply to the Australia-Japan relationship. There is no reset required for this mutually beneficial relationship and no changes in administrations cause any concern whatsoever.

In November Prime Minister Morrison made the special trip to visit Prime Minister Suga in Japan, knowing he and all who accompanied him would need to quarantine for two weeks. The importance of a face to face meeting in these circumstances and the progress on the Reciprocal Access Agreement reinforce the reality that Australia and Japan are natural strategic partners in this region.

At the same time as the Morrison visit, Australia and Japan were amongst the 15 countries that signed the Regional Comprehensive Economic Partnership (RCEP) agreement. Our two countries have been prime movers in this agreement, building on their success of the CPTPP11 of 2018 and showing again that they work together to support the open rules based trade order for our world.

The latest ABS statistics show that Japan remains Australia’s second largest trading partner. In the 12 month period 2019-20 Australian exports of Goods and Services to Japan were valued at $56.2 billion, while imports were $22 billion, giving a total of $78.2 billion. During this period there were no incidents of sudden changes to tariffs or quotas or any other negative actions that undermine the commercial relationship.

In July 2020 the Australian Space Agency signed a Memorandum of Cooperation on Space with the Japan Aerospace Exploration Agency (JAXA), signaling a new and exciting area of bilateral cooperation. The first instance of such cooperation resulted in the successful landing of the JAXA Hyabusa2 space capsule in South Australia with its cargo of samples from the asteroid Ryugu, a remarkable achievement.

Finally, also in South Australia, Mitsubishi Heavy Industries has made an investment in a project for the production of green hydrogen and green ammonia, powered by renewable energy such as solar and wind. This investment shows new directions in hydrogen, adding to the important developments of the Hydrogen Energy Supply Chain project in Victoria, which has Kawasaki Heavy Industries as the main investor.

Author: Manuel Panagiotopoulos

Managing Director, Australian and Japanese Economic Intelligence