Amid China tensions, Australia and Asean must iron out hard issues to preserve regional stability

Australia and Japan can help Asean leverage Australian and the Quad’s resources to manage the more assertive aspects of China’s regional behaviour
Canberra must also step up efforts to nurture its trade ties with Asean to ensure sustained relevance in their economic relationship

William ChoongandSharon Seah

Published: 11:00am, 17 Mar 2024

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Over the past five decades, the strategic relationship between Asean and Australia has evolved significantly. Marked by deepening cooperation and partnership across a broad spectrum of issue areas including security, economic development, education and cultural exchange, this relationship is underpinned by shared interests in promoting regional stability, prosperity, and addressing transnational challenges.

Both the Association of Southeast Asian Nations and Australia are part of various bilateral and multilateral frameworks aimed at enhancing regional architecture and fostering a conducive environment for open dialogue and mutual benefit. Australia now recognises Asean’s centrality in the Indo-Pacific.

Yet even after the recent 50th anniversary celebrations at the Asean-Australia Special Summit held from March 4 to 6, Asean and Australia continue to face heightened risks as the international order veers towards multipolarity amid polycrisis.

(From left) Australian Prime Minister Anthony Albanese, US President Joe Biden and Britain’s Prime Minister Rishi Sunak at Point Loma naval base in San Diego, California, on March 13, 2023. Photo: AP

Asean member states are wary of the upgrading of US formal alliances and the advent of minilateral groupings such as the Quadrilateral Security Dialogue (comprising Australia, Japan, India and the United States) and the trilateral Australia-UK-US (Aukus) arrangements. These trends intensify the risk of conflict between US-led alliances and groupings versus China.

To Asean, the rationale is clear: such US-led minilaterals could undermine its centrality and any cooperation with these minilaterals would rile China. While the member states cannot wish away minilaterals, they can nevertheless leverage these arrangements to their national benefit and regional stability.

There is a sweet spot here. After years of testy relations with Beijing, Australia is rebalancing its relationship with China, taking a more pragmatic turn towards trade normalisation. This would lead to greater regional stability, which Asean appreciates. However, Canberra and its formal allies – in particular, the US and Japan – want to continue to manage the more assertive aspects of China’s regional behaviour.

Philippine President Ferdinand Marcos Jnr in Melbourne on March 4. Photo: EPA-EFE

There is simultaneously a desire on the part of some member states (read: Vietnam and the Philippines) to stand up more to China on matters of sovereignty amid territorial disputes, especially in the South China Sea.

Speaking in Melbourne on March 4, Philippine President Ferdinand Marcos Jnr said Manila had “no choice” when it came to defending its territory against Chinese encroachments in the South China Sea. His foreign minister, Enrique Manalo, called on regional countries to stand together to uphold international law in the contested area.

In our view, Australia and Japan can help Asean member states “plug and play” into a robust deterrence framework involving the Quad and other similar arrangements to improve regional stability.

This does not mean that Australia and Asean will see eye to eye on China or that any member states would join the Quad. Rather, Australia can ask Asean members to draw upon Australia and the Quad’s resources to engage in straightforward, functional interactions in the interests of the region.

Members of the US army launch the M142 High Mobility Artillery Rocket Systems during the Super Garuda Shield 2023 joint military exercise including Indonesia, Japan, Singapore, Australia and the United States in Situbondo, East Java on September 11, 2023. Photo: AFP

Military interactions between individual Asean members and the Quad already take place. In September 2023, Singapore was part of a large-scale Super Garuda Shield exercise conducted by Indonesia and the US in which Brunei, Malaysia and the Philippines took part as observers.

Singapore, which already has a deep security relationship with Australia, has significant air force detachments Down Under. The city state also plans to welcome Australia’s new class of Aukus submarines to call at its base in the future.

In November 2023, Australia and the Philippines held their first-ever joint patrols in the South China Sea, days after Filipino forces conducted a three-day air and sea exercise with their US counterparts in the part of the Philippines’ exclusive economic zone it calls the West Philippine Sea.

Defence Secretary Gilbert Teodoro indicated that Manila would conduct more iterations of such activities with the US and other allies.

Australia upgrades Vietnam ties to highest level amid US-China rivalry

On the sidelines of this month’s 50th anniversary celebrations, Canberra and Hanoi announced that they had upgraded their relationship to the highest comprehensive strategic partnership level. This will indirectly plug Vietnam into the Quad framework. Canberra is already providing an effective backchannel for Hanoi to cooperate with Washington on sensitive matters such as intelligence sharing and maritime security without angering Beijing.

It is still a long way before Asean, Australia and the other Quad countries reach strategic alignment, if ever. Yet, doggedness and humility can go a long way. On the Aukus issue, for example, Australian officials clocked up air miles and made about 60 calls to leaders in Southeast Asia and the Pacific to convince them of the merits of the agreement. This effort turned somewhat negative initial responses from Malaysia and Indonesia into cognisance of the need to work for a better regional balance of power.

Besides strengthening political-security partnerships, both sides must emphasise and pay equal attention to nurturing the economic relationship. Australia’s trading relationship with Asean has been constant over the last two decades, but the country has lagged in the economic league tables. In 1980, the size of Australia’s economy was 85 per cent of Asean’s economy, but today, the combined economies of Asean are twice as large as Australia’s.

A person stands in front of a container ship at Port Botany in Sydney. Australia is Asean’s eighth-largest trading partner. Photo: Bloomberg

Asean is Australia’s second-largest trading partner, but Australia is only the bloc’s eighth-largest trading partner. Asean’s share of Australia’s total trade in goods was 14.6 per cent in 2022, whereas Australia’s share was only 3.4 per cent. Australia is also an FDI featherweight, with total foreign direct investment to Southeast Asia declining from 6.3 per cent in 2017 to 2.9 per cent in 2022.

The Australians recognise the need to step up. As part of a suite of initiatives announced at the recent special summit, Australia will establish a A$2 billion (US$1.32 billion) facility to boost investments to Southeast Asia.

Along with the Asean-Australia-New Zealand free trade agreement upgrade signed at the summit and Canberra’s keen interest in pursuing cooperation in the green economy, sustainability, climate, food security and digitalisation, there is promise of renewed relevance coming to the Asean-Australia economic relationship.

Australia’s appetite for Asean trade set to grow as mindsets change: experts

However, Australia needs to work hard to figure out how to tap into its engagement in two major free trade agreements that Asean is leading: the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Trans-Pacific Partnership. Australia has been one of Asean’s steadiest multilateral trade partners, but has yet to draw fully on the benefits of this trading club.

At the 50-year mark, the Asean-Australia relationship holds comfort and promise of a better, more inclusive future – but only if both sides are willing, in former Australian leader Kevin Rudd’s words when describing the Australia-China relationship, to be zhengyou: that is, a friend who dares to voice unpleasant truths and counsel caution. The same exhortation applies to Australia’s relations with Asean.

William Choong is a Senior Fellow at the ISEAS – Yusof Ishak Institute and Managing Editor at Fulcrum. Sharon Seah is a Senior Fellow and concurrent Coordinator at the Asean Studies Centre and Climate Change in Southeast Asia Programme, ISEAS – Yusof Ishak Institute. This article was first published on the ISEAS – Yusof Ishak Institute’s commentary website fulcrum.sg.