Australia must adapt its foreign economic policies for today’s global political climate to reduce the risks of international rivalries, according to a new report from the Perth USAsia Centre: Adapting Australia to an era of geoeconomic competition
The report, written by the Centre’s Research Director, Dr Jeffrey Wilson, proposes five policy objectives for updating Australia’s foreign economic policy for the contests of the 21st
As rivalries between the world’s major powers re-emerge, governments have begun to use economic tools as a means of competition. This shift away from the era of rules-based economic order that benefited Australia for the last 30 years has exposed the country to significant trade and investment risks, threatening our national prosperity and security.
Geoeconomic conflicts are a real and present threat to Australia’s national interests. This was revealed in 2020, when trade disputes with China undermined many critically-important industries. In the future, we should expect more international economic conflicts to affect Australia, in domains such as trade, investment, the movement of people and cybersecurity.
“The rules-based economic order that was established in the 1990s is now coming under massive strain. While this order was critical for developing Australia’s trade relationships with the Indo-Pacific and the wealth that flowed from it, geoeconomic conflicts mean that new strategies are now required”, Dr Wilson said.
“Geoeconomics sounds esoteric, but it has real, material connections to the daily lives of Australians. Chinese sanctions on Australia’s wine, for example, will affect local communities from Margaret River to the Hunter Valley. Towns like Muswellbrook in New South Wales have borne the brunt of China’s coal sanctions”, said Dr Wilson.
“Most of our trade policies were made during the era where economics and politics were kept separate – they were designed for good times. The question for Australia, is how we now change our policies for inclement weather”, he added.
The report proposes five key policy objectives to inform how Australia updates its foreign economic policy for the geoeconomic era:
- Diversifing economic relationships to reduce risk exposure.
- Investing in ‘defensive’ capabilities against coercion.
- Using geoeconomics tools more proactively.
- Building minilateral coalitions to support formal multilateral organisations.
- Broadening involvement and coordination in foreign economic policymaking.
To read the full report, click here
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