This is the kind of win-win outcome that has marked our trade and investment relationship with Japan over the past 60 years: where unique Australian resources – whether natural foundations or our people – can be used to exploit the opportunities of large export markets with the help of long-term and patient capital to finance their growth. This creates jobs that are both arduous and high-paying. John McEwen: There is no doubt that the first breakthrough in Australian-Japanese relations after the war was the trade treaty that I negotiated in 1956-57 and signed in 1957. When our relations with Britain diminished, it seemed to me in the 50s that Japan was the only other comparable market for our products in the world, and that`s why I went there and negotiated the contract. Jenny Corbett: The great need in international trade now is to liberalize trade in agricultural goods and services. These are therefore important key areas that would have been addressed and we hope that they will still be dealt with by the WTO, but in the meantime, without progress in this area, many countries around the world are engaging in so-called bilateral free trade agreements or preferential trade agreements. So the starting point for an agreement between Australia and Japan is that each party starts signing such agreements with a number of its other major trading partners, and the risk is that you will discriminate against a partner with whom you do not have such a bilateral agreement. For example, Australia signs a bilateral preferential agreement with the United States and, as a result, some areas in which American companies now have access to the Australian market, where the Japanese could be disadvantaged. So there`s a kind of race in this process that, once you`ve started the process, everyone has to be there. I think that in the climate in which we find ourselves, given that Australia has signed something with the United States, that Japan has negotiated with ASEAN and signed some agreements with a number of ASEAN countries, it would be strange if Australia and Japan did not care what they mean for their trade relations. In addition, there is the feeling that the dynamic has disappeared from australia-Japan relations, which we have begun to take for granted, and in a world where our regional power and economic balance are being altered by the rise of China, this also requires a little attention. China is thus becoming an increasingly important economic partner for Australia; Relations between Japan and China are sensitive and difficult, economically important for each country, but they face political difficulties and there are great sensitivities, both in China and Japan, as to who will become the most powerful leader in the Asian region.
China and Japan therefore want, for strategic reasons, relations with Australia in order to maintain a balance of power within the region. And this is, in my opinion, one of the additional elements that make it logical to open negotiations with a view to some kind of agreement with the Japanese. 5.57 In the 1970s and 1980s, despite changing global business models with growth and changes in production and technology, Australia found itself in a situation of “commodity dependence,” where iron ore, coal, wool, cereals, and beef accounted for the bulk of its exports.  The Australian government has acknowledged that the country relies heavily on this handful of raw materials for its economic prosperity and that a concerted strategy of trade diversification and expansion is needed to broaden Australia`s export portfolio. Improving access to Japanese markets has been only one aspect of a multi-dimensional strategy to create new and diversified markets.  5.14 The bitter trade conflict of 1936, with the embargo on Australian iron ore, left an unpleasant taste in trade relations and trade between the two countries did not fully recover for many years. . . .