 Well, ladies and gentlemen, after that extremely interesting speech by the Admiral, we're now moving on to a substantive part of our program today, Session 2, The Evolution of the Australia-Japan Strategic and Defence Partnership. I hope in my opening remarks earlier I didn't steal too much of the thunder of the four speakers we have before us. They are, respectively, rear Admiral Ake Motou, retired from the Japan Maritime Self-Defense Force. He's now the Senior Research Fellow of the Ocean Policy Research Institute at the Sasakawa Peace Foundation. Professor Alan Dupont, who is from the Lowy Institute and has published extensively on these sorts of issues. Dr Shiro Armstrong, Co-Director of the Australia-Japan Research Centre at the ANU, and Mr Gordon Flake, CEO of the Perth US Asia Centre. That's a very diverse group of people, and I look forward very much to hearing their views on the subjects or the issues that are the scope of this particular session, namely, what are Australia and Japan's interests in Indo-Pacific security, and what factors are involved in the convergence of those interests. Secondly, what are the opportunities for defence and security cooperation, including in promoting a rules-based regional order? And thirdly, what is the interaction of economics and security in the Australia-Japan relationship? First of all, I'll just alert the four speakers please to the time limit of 10, preferably no more than 12 minutes each, and that will allow a certain amount of time for discussion following the presentations. First of all, then, Riyad Raul Akimoto, would you like to take the floor please? Thank you, Chairperson. First of all, I'd like to mention the presentation today is a little bit provocative, especially for the participants from China. First of all, let me say that they are very sorry. The structure of the international society since the end of the Cold War has progressed along the globalization. Within that structure, global economy can be guaranteed by the stability of sea lanes which support borderless economic activities. Today, the major artery is sustaining the global economy sea lanes passing through the Indian Ocean and the western Pacific, which are world public goods serving vital common interest. This presentation aims to suggest a new dimension to the maritime security cooperation between Australia and Japan in the sea, the struggling over the Bay of Bengal and the sea in the Oceania as the outer rim of the main stream, main shipping stream. Of course, the Libyan sea and the Bay of Bengal are inseparable portions constituting the Indian Oceans, but the security environment of the Arabian Sea is quite different from that of Bay of Bengal and the actors concerned are different as well. It might be better to focus on the Bay of Bengal when we discuss the security cooperation between Australia and Japan in the Indian Ocean. Indian Ocean and the western Pacific Ocean, there are several overcrowded sea areas and chalk point. There are the Arabian Sea, Bay of Bengal, the South China Sea, East China Sea. Sea lanes passing through such highly access sea areas led to some convergence point, which are straight of Babylonian, straight of Holmes and straight of Malacca, Singapore. How would the global economy be impacted if the main shipping stream was stopped to navigate? Not stopped to navigate. As far as energy flow is concerned, about 40% of the world's sea bone oil trade passes through the straight of Holmes, which almost all of the oil tanker traveling across the Indian Ocean then pass through the straight of Malacca, Singapore for entering the South China Sea. In the year of 2013, Ocean Policy Research Institute conducted a research study to examine economic losses in the case of oil tankers transport from Middle East to Japan could not transit into the South China Sea on account of severe international dispute. A scenario of unable transit of oil tanker in South China Sea was illustrated as shown. Please don't think it over. This is only the assumption. We needed some scenario to study how the Japanese economy impacted. There was a confrontation between China and the littler nation in South China Sea, intense fights, breaking out weapon exchanges apprehended. Alarmed with the situation, US deployed naval forces in western Pacific. China declares the waters inside the 9-dash line as a denial zone, a denial area, and also claims that all foreign vessels should apply the China's permission for innocent passage right. In the waters inside the 9-dash line because there is under China's sovereignty. In addition, China warns of falling a large tanker, not enter the said area, under the pretext of preventing environmental contamination, arguing that if large oil tanker is accidentally attacked and oil spills take place, the marine environment should severely be damaged. Further, China revealed that if US deployment forces sterling zone, assertive action, China will take anti-access operation in the area, sea area between the first and second island chain. How would the real city large tanker bound for Japan be operated under the assumption? Avoiding such a dangerous situation, all large tanker from Middle East to Japan cannot but make detour from the Malacca, Singapore Street to the Malombok and the Makassar Street to navigate along the eastern coast of Philippines, northward to Japan. Further, if area inside the second island chain become anti-access area of China, all of our real cities bound for Japan will detour around the south coast of Australia and proceed northward to Japan to avoid navigation within the second island chain. How do the Japanese economy be impacted? Roughly speaking, Japan needs to supplement 10 more real cities. If all of the real cities to Japan are obliterated to needed to detour from the Malacca, Singapore Street to the Longbrook Street, it is not so difficult for Japan to supplement an additional 10 real cities. But their charter will incur another some 300 million US dollars per year. If all of the real cities detour to the south coast of Australia, Japan needs to supplement an additional 50 real cities more. It is too difficult to get such number of real cities for Japan. Even if Japan can hire another 50 real cities, it will incur 1.2 billion US dollars per year. Moreover, in such a situation, it is estimated the world will press will rise around the world. If the oil price rises 50 US dollars per barrel, Japan will have to pay another 66 billion US dollars a year. Further, the study estimated the world's stock price will remain 10% down, 10% lower for more than two years. This decline will cause an adverse impact on the global economy. When it comes to container shipping, we can easily estimate the routing we will bring about the chaos situation on the market because the container shipping is requested absolutely just in time. Thus far, now possible influence for Japan's economy have been revealed as it may be easily recognized. Japan can reroute half lead to the Western Pacific, but China and several ASEAN nations facing the South China Sea have no alternative but to pass through the South China Sea. For China, reportedly import 5 million barrels of oil a day, most of which are carried by sea, besides mega container harbors, sustaining ASEAN's economic prosperity, case of South China Sea. So, in such a situation, not only the regional but global economy should suffer catastrophic damage. In such an emergency situation, taking precautions against some containment strategy like the proposed US offshore control, China is expected to strengthen area denial and anti-access capabilities inside and outside of the first island chain. At the same time, China may attempt to obtain sea control capability in the Bay of Bengal, where exist important shipping port and pipelines for mainland China in order to overcome the so-called America dilemma. In such a situation, mentioned, securing the sea lines of communication along the route from vicinity of Sri Lanka in the Bay of Bengal to the sea area between the first and second island chain in Western Pacific via the Longbuk and Makastral Strait will become an indispensable strategy for Japan, Australia, the United States and other nations. Maybe China as well. It may be referred to as the stroke security over the outer rim of the main shipping stream bypassing the Malata Singapore Strait and the South China Sea. For Japan and Australia opening the stroke in the outer rim will be an indispensable condition to supply the national demand in contingency or emergency situations. China as well. Likewise for the US, controlling the outer rim will be a vital interest for its military strategy. Observing the security environment of the outer rim, except for the north side of the sea between the first and second island chain, their lack of well-functioning international arrangement or framework to maintain maritime order. Therefore, safety and freedom of navigation cannot be guaranteed in case of contingency or emergency situations. Security of the seas in the north area of the first and second island chain seems to be secured under the US-Japan security treaty. Concerning the Bay of Bengal, India had been an only state responsible for ensuring security there, but the current strategic structure of the Bay of Bengal has obviously turned more complex. The economic growth of India and China as well as their increasing maritime activities are promoting the confluence of seas in East Asia and South Asia. When the two seas merge, culture and strategies of different natures meet. The city in the Bay of Bengal is a common property of the world and there is no doubt that stabilization, stabilization of the security environment there serves the common interests of all nations on the other hand. The reality is each of the states making its way into the Bay of Bengal has its own strategy for global competition, a situation likely to provoke confrontation between or among different states. China is at present taking a variety of approach to the littoral of the Bay of Bengal seeking to have greater influence in the sea lands or to gain economic benefit. China's approach, whether they are competitive or cooperative, are greatly affecting the security environment of the main shipping artery in the Bay of Bengal heading to the Malacca Singapore straits. Thus, maintaining a safety navigation in the outer rim which provides an alternative sea route in the Bay of Bengal heading to Lombok strait instead of Malacca Singapore strait will be an important strategic imperative for Japan and Australia as well as the US. In the view of Sri Lanka is a very key strategic state. On the western Pacific side of the outer rim, the gateway of Makassar strait faces the west edge of Micronesia that constitutes the southern part of the sea between the first and second island chain, whereas the vital sea area which provides a detouring route from the South China Sea and strategic stroke among Australia, Japan and the US. But navigation safety is not necessarily be secured there. Republic of Palau is located at the center position in the southern part of the sea area between the first and second island chain. Thus, the United States concluded the compact of free association with Palau as well as with the Micronesia Federation and the Marshall Island in which the US have right to military affairs in compact areas. But this co-far with the Micronesia Federation and the Marshall Island will terminate in 2023. Power vacuum phenomenon may be brought to Micronesia after the end of co-far. So let me conclusion. Then what and how should Australia and Japan do? Firstly, we should try to obtain sea control capability over the outer rim so that we could keep shipping route and strategic advantage in wartime. To be more concrete, the following are proposed. Australia and Japan should make a good relationship with the coastal states of Bay of Bengal and the island nations of Micronesia so that the two states could obtain geopolitical power balance, power basis for activities both in commercial and defense field. One key state is Sri Lanka located in the western part of the outer rim. Australia and Japan can plant multilateral naval exercise association with India, Sri Lanka. And the United States using port of Sri Lanka, the exercise may be planned as the framework of exercise Malabar or cooperation of water readiness and training. Another key state is Palau occupying the center position in the sea between the south portion of the first and second island chain. Australia and Japan should assist Palau for capacity building. That is my conclusion. But this my conclusion is based on my very pessimistic perspective. So needless to say, we must do first is make effort to set up some cooperative maritime security architecture with China. Thank you very much. Thank you, Professor, as a rear admiral Akamoto, Professor Dupont. And before I didn't mention that he's actually currently the Professor of International Security at the University of New South Wales. Thank you, Alan. Thanks, Murray. Good morning, everybody. Actually, it's good afternoon. I've been encouraged to keep my presentation brief and to the point so I'm going to do that. I want to start off by just reflecting a bit on at the broadest level what are Australia and Japan's shared interests in the Asia Pacific. We've heard the phrase rules-based order used about 25 times already, I think, this morning. So I just want to unpack that a little bit because I think we need to have a discussion around what that means and why Japan and Australia committed to its preservation. So the key point is that if you reflect back to 1945, the rules-based system was a system of shared interests and shared values around the victors in the Second World War, essentially the European democracies, the United States, and Australia was a fully paid up partner there. And Japan, of course, came on board and democratised rapidly. So Japan and Australia have benefited from a system that privileges liberal democratic values, the free market, the institutions that continue to be dominant in the world today, and all that was underpinned by US military power. That is the system that both Japan and Australia seek to preserve. Now all the more so when for the first time in 70-odd years, that system is under serious challenge globally, but particularly in this part of the world, primarily because of China's rise. And the question mark over China that really that I guess we have to address today is not only what kind of China will it be, but what does it mean for the rest of us? And it's increasingly clear to me over the last four years that China's challenge to the regional order is detrimental to those values and interests that I've just outlined because the alternative view or the alternative order that we confront is a region dominated by the largest most powerful Asian country that neither shares our values and not too many of our interests. Now one would hope as a good diplomat we can reconcile those conflicting interests and values, but I don't see that happening in the short term. In fact I see a widening gap between Australia and Japan and the things that we believe in and what China is seeking to do. Okay now why is it that Japan and Australia are now coming together more closely than ever before in our modern history? There are a lot of reasons for that. I'm just going to focus on a couple. Let me just continue with the China narrative because it's central. Japan has become increasingly anxious about its position in the Asian regional order and about its own security. That's pretty clear and a lot of that we've seen generated by some of the tensions the East China Sea directly involving Japan and China not involving United States I might add at this stage. There's nothing to do with the United States at one level. So Japan as it's become more anxious about its future it's looked for more friends because the key conclusion Japanese policymakers have made I'd say over the last five to ten years is that in the face of a challenge from China to its core security interests maybe Japan cannot rely upon the United States to come to the rescue like the Seventh Cavalry. That it needs to diversify what we call its political and strategic risk. It needs more friends and so it has begun to actively seek more friends in the region and when it looks to the region the one country that stands out as a person who could become a close friend is Australia and why is that? Because not only do we share this commitment to the international order or the old order if you like that we've had here the 70 years but of course Australia and Japan have been fully paid up members of the US Alliance. That's a significant factor in Japan's thinking. We have often been called the northern and southern anchors of the US Alliance so it is quite natural that Japan will look at Australia as one of the first countries it would seek to deepen its relationship with in the future. Okay now so you can see that China's rise is pushing Japan and Australia together more closely. Not only about China it is also concerns in Japan about the durability and commitment of the United States to this region notwithstanding the US rebalance. Now I think that's exaggerated personally but I can understand Japanese concerns there. So this also goes to the heart of the US Alliance and I know James Brown is here and he's sent to put out a very good paper on this just yesterday but my big takeaway from that is that the Alliance itself is changing. It's no longer the old hub and spokes model where the US is at the centre and all the interaction is between the US and the spokes including Australia and Japan. Increasingly it's around the hub of the wheel so Japan and Australia talking more and more together and you know Australia and Korea will be talking more together and there are other players on that on that sort of hub if you like to stay with that metaphor. So a more fluid partnership of equals within the US Alliance is also the context for Japan and Australia working more closely together. To other points I think are relevant here. If you look back historically there have been two constraints on the development of Australia defence and security relations with Japan. One obviously after the Second World War there are a whole generation of Australians who would not countenance having a defence relationship with a former adversary. Now by the late 1980s that generation's influence was fading and Australia was looking at Japan as a model democracy and a potential defence partner and in 1989 those who remember General Gratian went to Japan and began the process of the new defence relationship and over the next 20 or so years it's developed along the path of pretty conventional bilateral defence relationships but we're now at a tipping point okay we've gone from being reasonable partners and somewhat defence and security cooperation improving all the time to a point where we now may become more than just if I can say normal defence partners we may actually be moving to a novel level. Some people have described it as a quasi defence alliance I think that's probably going a bit too far but we are on the verge of something qualitatively different with Japan. So why is it that we've got to this point it's not only about these external facts as I've mentioned but the Australian perception is Japan is now open for business in defence and security in the way it was not pre Shinzo Abe. So Prime Minister Abe has changed the environment for Australia as well as for Japan. There's a lot of a lot of the focus has been on the relaxation of the constitutional restraints on Japanese defence policy and that's been important that is allowed Australia to become more of a full partner with Japan because Japan can now reciprocate but I think equally important has been the liberalising if you like of the long-standing constraints on the export of Japanese defence technology that is why Japan is now able to bid for the Australian submarine okay so that's been very important too because that's been a real constraint about what we could do with Japan. So both those things have changed and they're underlying factors in actually allowing Australia and Japan to fulfil the potential of their defence and security relationship. Okay a final point I want to make here is that where do we go from here? I have argued that the if Japan is successful in winning the submarine tender it could be a transformational decision in terms of the overall relationship not just the defence relationship. Why do I argue that? Because Japan is increasingly seeing the submarine project as a watershed moment in the overall bilateral relationship with Australia opening up all sorts of possibilities for cooperation in science and technology in manufacturing industry telecommunications and a whole range of associated industries and sectors that Australia has been trying to gain access to over the last 20 to 30 years largely unsuccessfully because Japan hadn't really seen Australia as a full partner in that sense. I think that's changing the submarine project is quite critical but even if Japan doesn't win the submarine tender I think the quality of nature of the defence and security relationship is going to change dramatically and it is going to go to a new level and there will be consequences. There's an upside and downside to all these things right. So the upside is a more productive relationship between the two countries the downside is we may have increased our political and strategic risk because of China's rise and because China's view that this is not a partnership that they want to see continue and develop I think that's a fair summation of the Chinese view. They have been publicly critical of shall I say the the the the Julie Bishop initiative to to launch new strategic partnership with Japan so it's pretty clear that China does not want this to go ahead. So that's the downside risk for us and we have to make judgments about where we come out in and the net sense and all that. So I guess my final point is this that in this it's very hard to predict how all this is going to play out because there are so many moving parts but to me the key driver of where our relationship with Japan goes in the future and what sort of security environment we're going to see in this region is whether China is going to rethink what it's doing in the South China Sea. It is a fate to complain the sense that they've already done what they've done but the question is how much more would China do and how it will operationalize its its military garrisons and capabilities in the South China Sea and potentially right through into the Indian Ocean. How is China going to operationalize that that's the key question for me and that's going to really determine a lot of our responses in terms of our security relationship and partnerships with other countries whether it's Australia Japan Australia United States Australia India and all the other relationships that we will probably be talking about today. So I'll leave it there thank you very much. Thank you very much Alan and I'd like to call now on Shiro Armstrong. Thank you. Great thank you very much Murray and let me take this opportunity to thank Rory and the National Security College for inviting me to to talk today. It's a real privilege to talk on a distinguished panel. I'm going to be talking about the economic relationship so a bit of a different take the Australia Japan economic relationship. I think that's important to understand for seeing why seeing what underpins the deep and broad relationship between our two countries and there'll be some security implications. Most of these will be implicit some explicit I'll rely on Gordon after me to draw those out explicitly. So I thought I'd start just quickly by looking back at what's led us to this point some really important agreements that we signed very early on the 1957 agreement on commerce still in a climate not to remove from the end of the war a very important agreement that was difficult to do politically but we were the first Australia was the first country to afford and grant Japan most favoured nation access under the WTO so back then the GAT sorry. So we gave Japan equal best treatment of our trading partner so it was a very strong significant not only symbol but reassurance to Japan to open up and rely on us as a trading partner followed by the 1976 basic treaty on friendship and corporation which we're celebrating the 40th anniversary of this year and that extended and further broadened the earlier most favoured nation treatment that was for goods trade to really treating Japanese investment and migration on equal best terms as our other partners. So very two big watershed agreements early on that helped lay the foundation for our current economic relationship Australia and Japan were instrumental in the creation of APEC and leadership there in Australia and Japan throughout the 70s and 80s I think talking those things through and showing leadership with other countries in the region and I'll come back to the role of Australia and Japan in regional forums later and then more recently signed in 2014 and in force about a year ago the Japan Australia EPA which many of you be aware of which takes the relationship to the next next level economic relationship as well as broader political relationship I don't think. So I'll come back to that as well and I want to talk about four things basically so first is to talk about how important Australia is as a raw material supplier to Japan and Northeast Asia something I'm sure you're all very familiar with but I thought it's worth just repeating and reinforcing second of all to talk about the breadth and depth of the economic relationship talk about some of the the scale of that and what the new areas are I want to talk about how the bilateral economic relationship is actually beyond bilateral and how we're nested in a deeply interdependent region in East Asia and across the Asia Pacific and increasingly towards South Asia as India looks and acts east and finally I'll finish with a bit of discussion on leadership regionally and I'm talking here mostly in economic agreements and in economics economic architecture but I think there are important implications beyond the economics so just remind us how important Australia is as a supplier of energy to Japan we supply 21 percent this is gas and coal mostly is to be a bit more uranium largest supplier than than Saudi Arabia Middle East countries I think this this says a lot and we are a secure and stable supplier the Japan South Korea and in China depend on them so we outside of oil I think we are the most important across most of the strategic raw materials the most important supplier and us being a stable secure supplier is very important so we supply over 61 or 60 percent of Japan's iron ore bauxite aluminium nickel so forth and really this is a key part of why Australia is sort of important in northeast Asia and Asia more more broadly so I said it's almost everything except oil so that's that's the basis on which our economic relationship is built bilateral trade is around 66 billion dollars a year both ways Australia is the second largest trading partner of Japan sorry Japan is the second largest trading partner of Australia behind China third is United States fourth is South Korea and we are Japan's fifth largest trading partner Japan holds the fourth largest stock of foreign investment in Australia investment the other way from Australia Japan is relatively low in fact foreign direct investment stock in Japan is extremely low I think that's a new area of opportunities Japan opens up further to foreign investment to to modernize to reboot its economic recovery Japan played a crucial role in developing our natural resources sector and making it the most efficient resource sector in the world and at the technological frontier with investment but more importantly earlier on with long-term contracts developed between Australia and Japan that really gave stability and security in in those business deals the economic relationship the foreign investment from Japan to Australia is diversifying rapidly beyond the natural resources food and beverage retail and you would have heard of the takeover of toll last year by Japan Post at 6.5 billion dollars and I think that shows how important Australia is as a stable open market a mature market and Japan's acquisition Japan Post's acquisition of toll for example shows that you know management the expertise we have in logistics internationally I think is an area Japan is expanding into our bilateral EPA in force last year is very important as a first agreement Japan signed that significantly liberalized agriculture Japan and sign many agreements that really didn't touch the Japanese agricultural sector or services sector we've made some significant inroads into Japanese services and agriculture the TPP makes some further inroads and helps Japan's third arrow reforms along to an extent so I think those are really important points to understand where the economic relationship currently is but it is a beyond bilateral economic relationship as I mentioned it's nested in a really highly integrated region East Asian intra-regional trade shares are equivalent to that of Europe despite not having the strong institutional foundation for those economic linkages Japanese goods are exported to Australia directly but also through China and Southeast Asia so a lot of Japanese branded products don't come directly from China but importantly through the production networks and supply chains throughout the region to Australia I think that's quite important to understand the beyond bilateral element many Japanese companies in Australia that invest here sell not just back to Japan but to the rest of the world and importantly into Southeast Asia and China and in fact Mitsui sells more Mitsui's large trading company is one example sells more to China than it does to Japan and many were surprised and really think about this shouldn't be a surprise but the CEO Australian CEO of Mitsui coming out last year in support of the China Australia free trade agreement I think it was a bit surprising to some people but from year to year the big trading companies sell to whoever buys the highest price and if that's China Southeast Asia United States it's not surprising and both Australia and Japan have China as their largest trading partner and we're locked into China economically Japan's really important to China you might think it's a lopsided some people think it's a lopsided relationship I think it's mutually extremely interdependent Japan's extremely important to China for its investments trade into China as well as the technology that China relies on and also Australia as I mentioned before not just to Japan but to to China as well as strategic supply of strategic raw materials and increasingly as the commodity boom is now over there's going to be the growth market for our services importantly sitting where we're sitting hopefully education okay so I'll just finish up on on what's next before I run out of time I think like with the formation of APEC where Australia and Japan work together really is important for Australia Japan and other partners in the region to work together and shaping the shape of the region shaping the region and regional architecture and I think this is in need of a reboot and I'll explain that briefly we're both members of the G20 we're both members of the TPP we're both negotiating the regional comprehensive economic partnership there's a real significant role that we're able to play if we can step up and work together to play this role of leadership the Trans-Pacific Partnership was signed the challenge now is going to be to ratify the agreement and that's not going to happen all that quickly in the current climate in the United States and that's a big challenge another challenge is going to be accession to the TPP for non-member countries and how how we facilitate that and how we facilitate that at a high level of commitment are we very important importantly we've got a free trade agreement the United States Japan has an EPA with us but the TPP I see largely the big bilateral where all the action is is between the United States and Japan now importantly China India Indonesia are not part of the Trans-Pacific Partnership they are important economic partners of Australia and Japan India Indonesia continue to grow become much more important economic partners there's a recognition I think by those three countries and many others that they're not going to be able to join the TPP anytime soon the TPP comes into force perhaps early to mid 2018 there's still long accession road has to go through US Congress after that so I think being realistic about that where the action is on the China India Indonesia front will be in the regional comprehensive economic partnership and I think I think there is recognition in China and India of the importance of RCEP this RCEP agreement without a strong RCEP agreement that is implemented and without China and India bringing especially China and India and hopefully Indonesia bringing strong commitments and liberalization to open their markets open their economies there will be no RCEP and without an RCEP agreement it's really left to the TPP and given the recognition to India and China will not be able to be party to the TPP anytime soon I think the calculation is not all that complicated and hopefully we see these countries stepping up to the plate so I think these are all important agreements moving towards a broader free trade area of the Asia Pacific including India and other non-APEC members but also towards a broader global regime change the WTO is extremely valuable and useful for underpinning open markets globally still and I think that needs a bit of a refresh and reboot boot given the Doha round is stalled I'll just finish with we've been talking about the rules based order and the open rules based order I think it's important to recognize how the WTO at least on the trade front underpins that and how that's been such a useful forum for resolving disputes including especially with with China the rare earth metal case the embargo of blocking exports supposedly blocking exports to Japan and elsewhere was settled peacefully in the WTO with China accepting all the rulings the only parts that they're appealing to is to understand more where their accession rules differ from the general WTO rules so I think that's a good news story and the importance of the WTO and hopefully I've helped out on the economic front thank you thank you very much shiro could I call on you Gordon to give us the US perspective well as you'll quickly ascertain there's a little bit more Arizona than Australia in my accent but with the shared love of sand and red rock and better beaches I'm happy today not to give the US perspective but a Western Australia perspective I've spent the last two years as CEO of the Perth US Asia Center at the University of West Australia and well Professor Roy Metcalf in the earlier introduction kind of hedged a little bit on the notion of the Indo-Pacific saying it's a contested concept in Western Australia it is not a contested concept it was advanced strongly by Stephen Smith you know a Western Australian foreign minister defense minister has continued to be advanced strongly by Julie Bishop a foreign minister from Western Australia been more importantly perched in Perth as we are we call ourselves Australia's Indian Ocean capital and as such the constructs make a lot more sense from Western Australia the Japanese ambassador referred to Australia in Japan as bookends in the region we prefer the notion of Australia being the fulcrum point between India and between Japan in the Indo-Pacific so rather than being at the bottom of the Asia-Pacific out of sight out of mind at the middle and obviously that gives certain advantages to Perth's particular position in that regard I will make a couple of broader observations on the topic and then focus more specifically on this panel's you know issue in terms of the Japan-US relationship first I thought it's important to clarify when we're talking about you know Japan-Australia relationship in the last 10 years the last five years in particular the biggest change has taken place in Japan not in Australia Australia has long had kind of a a broader kind of strategic view of the relationship uh and integratively intertwined between the it and its alliance relationships in the United States but Japan has has been a nation that's had a lot of constrictions on its ability to participate and so as previous speakers have mentioned really has been the shift politically within Japan moves by Prime Minister Abe that have shifted and and one of the most high-profile ones of course Alan has already addressed in great detail and that is in Japan's ability to participate in you know defense contracting if you will where they were legal and cultural and regulatory restrictions within Japan in that process but but as such it means that there's an awful lot more on the plate than there was before even just five years ago and so this discussion becomes a lot less symbolic and a lot more concrete than it would have been just five years ago um the other clarification client comment I'll make is that um you know in some respects if you look at Japan-Australia cooperation it is still to date very much an Asia-Pacific relationship it is not yet fully an Indo-Pacific relationship and I'll come back to this in a minute because that may be the area where there's a greatest area for potential for expansion because thus far and again we heard from the ambassador Japan perceives the Australia-Japan relationship in the Asia-Pacific they don't yet perceive the broader potential of it in the Indo-Pacific and I appreciate the Adam Rills you know quite client inclusion of the the Bay of Bengal but the interesting thing is interesting there wasn't much focus yet on the Australia piece of that in terms of the Bay of Bengal um let me turn to the topic of hand you know the evolution of Australia-Japan strategic and defense partnership and what I'll do is just hit three main points first looking at what I would describe as the push you know those external factors which have you know driven Japan and Australia closer together and then my remarks will closely track some of those Alan has already given secondly I'll focus on the pull you know those things internal that are actually driving a closer relationship and then finally I'll look at some of the opportunities that I think we haven't yet put on the table for the relationship going forward particularly as it deals with the maritime issues going forward the push issues are pretty obvious but the important point I want to make here is that we cannot look at the Japan Australia relationship in a vacuum it is simply not a bilateral relationship every trend that I'm going to talk about and that we've talked about already mirror trends that have taken place in other relationships so for example if you looked at 2014 you know there was a massive round of diplomacy taking place between Japan and Australia and then Japan and India between Australia and India and Australia and Japan and between you know if you look at the travel of the prime ministers all three of them made those two visits their first and most important visits you know so it's important to recognize that the same external push the same external dynamics that is driving a closer relationship between Australia and Japan is also driving Korea to think about how its role in the region is is driving thinking in asian is think driving thinking about japan's relationship with asia and japan's relationship with india and it's useful to understand that it is not bilateral it really is kind of a broader shift in the region at large and obviously the first and foremost factor in that is the rise of china it's been addressed I think by every speaker thus far so I won't go into too much detail but I would know that it's useful to be kind of more direct on this for political reasons you know one of the nice things about being in a university or think tank is you can be a little bit more direct than the wonderful admiral who gave a very forward-leaking speech but didn't for the first 15 minutes mention the word china right it's kind of the chinese version of certain countries that we can't talk about I attended about five years ago a conference in europe that was very european in nature they wanted to talk about creative destructionism in the global order and of course as you might imagine everyone that was from washington dc said so we're talking about china here right and the european said no no no we're not talking about china we're talking about threats to the global order you know we've heard you know the liberal world system you know the rules-based system but really the only country out now there right now that is challenging in a significant way there's a difficulty to kind of address that in a serious way I would just make a couple of notes on that front there has probably been no bigger beneficiary for the last 50 years of that system than china and so I think it's very important to state out very clearly from whether it's an Australian perspective an american perspective a japanese perspective that we are all deeply vested in china's benefiting from that system so to say this to what i'm saying is in no way or shape anti-china right uh because that system itself has served them extremely well other external factors that are worth mentioning is very brief and again they've already been addressed so I won't go into them in great detail are the us rebalance the pivot to asia and again alan described this very well as is the hub and spoke turning to the hub there is a heavy priority on you know like-minded countries working together and the way that was reflected in the admiral speech today uh was noting that you this is not a system that is made based on right might versus makes right or a strict hierarchy you know obviously there is a hierarchy in terms of capabilities but in terms of shared interest and cooperation in working together you know that was always I think probably always been the aspiration that countries that have a shared interest and shared values would work together and if you look at you know what the US has done for the last 50 years in southeast asia what it can constantly tries to push south korea and japan to do together or australia together that's not a new theme you know the pivot is not a new theme it's just articulating it in a more clear way going forward um I would note again from a western Australian perspective in in particular uh it was refreshing today to hear a japanese ambassador make a pitch you know for Mitsubishi heavy industry submarines you know that that's actually quite a historic thing I mean I've been working at japan for almost 30 years it's very rare I mean it's common for australian ambassadors or us ambassadors european ambassadors to come in and pitch everything from airbus to Boeing to whatever right but to have a japanese ambassador saying that ours is more reliable it's on time you know it's under budget you know it has these capabilities it's kind of it tells you what a different world we're living in right now I would add to that uh you know again from a western australian perspective where you have hma sterling the largest naval base in the australian navy you have a growing capacity at the Henderson marine complex you know and obviously and a long coastline which is the closest to Asia there is a keen interest in these developments and I think it'll be something to play out in the future going forward let me move on quickly to talk about some of the issues that kind of pull australia and in in japan closer together in this strategic relationship we're discussing but these are those areas that are really internal again a lot of them have already been raised before the shared interests and values the liberal rules based world order and here in the liberal world based world order I'd like to make a very important distinction and again the admiral said it but I'd like to make it even more explicit in that is we often assume that the existing system right now is one that's under u.s hierarchy you know and what china is doing is changing that hierarchy in fact we had a question from dr tang specifically on that regard is is a rising power chasing an old power and often we hear you know this assertion that you know the u.s had the monroe doctrine and so why can't china within the first island chain or the second island chain have the same monroe doctrine but in it to be really explicit you know the current system the liberal based rules based orders is a rejection or a repudiation of the monroe doctrine yeah the monroe doctrine was a a product of the previous century that this system was designed to replace you know that wasn't based on might make makes right it wasn't based on hierarchy and so it's important to kind of have that context as you're going forward and particularly if you're looking at it from a closed-based regional perspective but obviously you know those areas again the shared values the shared interests in the system the shared interests that shira outlined extremely well in terms of trade the free trade agreement the tpp the ever-increasing you know australia japan economic interdependence between these two countries cooperation on cyber climate change etc but here's something else i thought i should emphasize that it's important to recognize that japan and australia have a shared national interest in china's economic progress and so often in the australian media this issue about japan australia strategic cooperation is pitched as japan is trying to pull australia into its fight with china that's the narrative right but if you think about it you know often when we talk about australia china relations worth is versus australia us relationships we make a very important distinction between investment and trade you know australia spends sends tons of stuff to china rock it's in fuel right you know but those are very transactionary at the border transactions that don't necessarily speak well in terms of the level of trust the level of integration the systems integration the way investment does and so obviously if you're kim bezley who's now back from being ambassador he wants to trumpet investment investment as a better measure of the importance of the economic relationship because you have invest so look at the japan china relationship versus australia china relationship i would argue that china is far more important to japan that it is to australia and far more deeply integrated if you look at the level and numbers of japanese investment in china and the degree and the length to a china japan has been deeply intertwined and integrated into china so the notion somehow that japan is trying to pull australia into a conflict on a security basis you know you know with china is a really shallow level analysis the relationships are different uh they're they're again i think complementary and they have a shared interest i've gone on too long so let me just move very quickly on to opportunities and here i would just go back to what i said at the outset i think it's useful to think about one area of tremendous opportunity is the transition from the japan australia relationship as an asia pacific relationship into an indopacific relationship so what is it that we could do to play on the things that the admiral mentioned earlier on in terms of positive developments that are taking place in the indian ocean naval symposium indian ocean remission areas both where japan is playing an observer role and is active but has tremendous capacity for training for cooperation you know the more that they can do that together with australia the better going forward more broadly then you have even without considering the indian ocean region you know tremendous areas for cooperation with asian you know asian has been a major priority for australia australia has tremendous capacity and strengths and they even relative to the united states uh and this is an area where japan has tremendous capacity but there's not an awful lot of coordination japan australia asian uh the admiral earlier today was asked about the quadrilateral that remains sensitive remains sensitive here in australia it's sensitive in in india as well but what is not sensitive is the growing number of trilaterals are out there uh and the potential for others whether they be japan australia asian or japan australia china even on energy security issues if you look at the shared mutual dependence on energy issues you all heard uh you may have seen this week the first major shipment um of lng out of the gorgon wheatstone project in western australia we probably got more media play in western australia than did here but there's a 70 billion dollar investment that's taken the last 10 15 years to get up and running western australia that began to pump lng for the first time and by all estimates by the year 2020 australia will be the world's largest lng exporter you know surpassing katar you know that has real implications for the relationship with both japan and china and the ability to cooperate on energy's kind of security issues in the region in a very positive way going forward um and then uh finally i think as i've gone on too too long i'll just wrap up by repeating um what i said at the outset that it's important to recognize that you know japan australia relationships don't take place in the vacuum they really take place in the broader context of developments in the region both positive and negative and i think there's a lot of potential as it moves from an asian pacific relationship to an indian pacific relationship thank you very much gordon that also stimulates i'm sure a lot of questions from the audience all four presentations i'm sure will do that uh could i give it to questions first on the front here thank you we've got 15 minutes for questions so please make them brief and try to keep them to one each thank you very much my name is osamu isawa i'm coming from the japanese embassy i'm head of the political section in the embassy so uh these days i have been working on the submarine corporation and i'd like to a little bit uh talk about furthermore uh the the fact that mr gordon described uh in this presentation uh sometimes i i found uh encountered a very interesting article in australian newspaper that saying that if the japan is selected as a partner uh this is a very uh long-term contract that means that uh in the future australian australia would be a part of the japanese strategy so and australia would be invited the fight against china that of uh gordon described so but i think that uh a little bit uh from the japanese diplomat i really is i feel embarrassed uh this argument because uh we are we are ready to transfer the ip so so that the australia australian government can maintain the sovereign uh sustainment in the future so our strategy will be decided uh the best interest judged by the australian government not japanese government so uh even so there's no any restriction on on the submarine corporation and there's no constraint of the submarine corporation put on the future strategic corporation between japan between japan and australia so but i i don't know how how can we interpret uh this cautiousness uh from australian public opinion leaders uh some there are some opinion leaders uh develop this kind of argument so we are very interested in the thinking of this argument so maybe uh differences i think that is that argument that you've just summarized is contrived and disingenuous because um there is no sense in which whatever we do with japan or any other country in terms of defense cooperation binds us naturally to their strategic objectives you know so i mean if you want to apply that argument to every other country you could apply it to when china buys uh you know kilo submarines kilo class submarines from from russia i mean it's it really is a bit of a silly argument but you're absolutely right it does exist so let me try and explain why i think it is the case i think there are two reasons right one is there is a lot of nervousness uh particularly Australian business community about anything that might jeopardize our trade relationship with china okay so the perception there is a perception the other thing is uninformed but nevertheless a perception that we can't rock the boat and anything we might do with japan not just submarines by the way would be seen by china as injurious to our relationship and incur their hostility so we shouldn't do it okay uh and the submarines is just one part of that so that's so that's that's a view in some parts of the Australian community particularly in the business community i find this quite a bit okay um there also is a kind of parallel set of arguments around about japanese the japanese militarizing again you know this is the old japan rising mr arbe as often described as a right wing nationalist etc etc i don't think that's a mainstream view but i do account come across that so both of those arguments feed into this particular point you made that perhaps we shouldn't do stuff with japan because it might offend china and by the way where is japan going anyway you know so but i actually don't think it's representative of the broader australian the public view or our political or our political elites for example i don't find that very frequently but you're absolutely right it does appear in our newspapers from time to time one of the things that's worth emphasizing is that too often in the australian media and in the public discourse there tends to group together the south china sees maritime disputes and the dispute over the the senkaku or the dalyu islands right because they're all maritime disputes and we assume they're all of the same level of dangerousness and in some ways you know the one area in the last year on maritime disputes where there's positive developments it's been on the senkaku dalyu islands right it's because both china and japan have recognized there's an awful lot at stake they've they've kind of stepped back from it and worked really hard on it and that just kind of goes to the point i was trying to make earlier this is a relationship where japan has got an awful lot invested in it and so the narrative somehow that by working with japan which is now working right close to china this you're somehow going against china is is i think too sensitive by half a little bit more catholic than the pope thanks very much gordon i've got three people now four or five more people i'll take two or three questions together thank you one here anthony bergen from the australian strategic policy institute the ambassador japanese ambassador referred this morning to the australian-japan strategic partnership in the pacific it's been completely overlooked in australia i couldn't even find it on our defat website but it's a very important document for australian-japan relations in the pacific so i have three suggestions opportunities in the spirit of this conference to for the admiral to think about as you focused in your remarks on oceana one is that australian-japan could work together to support the new peacekeeping and disaster response center in fiji it's at black rock near nandy australian-japan could very well work together to support regional efforts in that through that center the second area is the one you yourself mentioned and that's micronesia it's a very underdone area from australia i visited there last year very surprised we didn't even have a defense attache despite the fact is you rightly say the strategic stocks of micronesia are rising with this massive us military buildup in guam so australia and japan could work together uh much more in the north part of the pacific um and the third area is some a few people have mentioned the quadrilaterals there is a quadrilateral agreement in the pacific and that's australia u.s france in new zealand relates to maritime domain awareness and there's no reason why we couldn't make that quadrilateral a pentagon and include japan thanks anthony now the next question was up here yeah sorry sorry sorry sorry both of you your next plates after that andrew car from the strategic and defense study center i guess this is more of a comment but i'd certainly be interested in the panel's um kind of response we've heard today and especially in the admiral's comments but from a number of speakers this picture of the regional order that is a pristine environment almost for the last 70 years of peace and prosperity and then suddenly there's this new and unprecedented challenge today and i can understand why we might try and frame it in that way particularly kind of pushing back against chinese claims and aggression but i wondered and worried just how accurate a picture that is and if trying to tell ourselves this story we're not misleading ourselves about what kind of a challenge we face the challenges i see in the regional order aren't new they are enduring and in fact this is mainly in many ways the challenge of them is that they have been so enduring for so many years the korean peninsula taiwan competing claims in the south china sea these are cold war era problems that remain today and while we're certainly china's challenge is significant and another step up it's not the only country that's challenging this regional order you know to say that there is a universal acceptance of the regional order i think presents a completely different picture than what our history actually tells us uh and that you know vietnam and philippines and taiwan have their own views about how freedom of navigation and control of land and maritime assets should go indonesia um thailand have our different ideas about governance about democracy about economics and i think trying to tell ourselves this story of a clear us order that was established and and run through to today kind of misleads us on on our history but also suggests a fragility to the order that um this is the first time it's been challenged and therefore it may not last beyond this moment when actually this is an order that has endured despite these challenges and through these challenges in ways that analysts have often kind of predicted would fall short so i guess my question to the to the panel is if we can't agree on understanding our history how accurate are we going to be in in kind of deciding and understanding the contemporary challenges and the right way to address these problems in the future thank you thank you uh bites thanks just a very quick comment in relation to the first that was raised earlier this notion that uh simply through defense technological cooperation uh the australian japan relationship will turn into some sort of virtual alliance at one point i haven't seen raised in all of this debate is quite the opposite outcome um there are plenty of examples of defense technological relationships going very sour in fact um in spite of the good record that japan has demonstrated domestically in terms of delivery let's not forget this is the first time japan's ever done this um it's going to be a very difficult technological undertaking there's no guarantee of its success we know that even with countries that have had considerable export experience such as sweden we've had all sorts of issues and problems with the previous submarine program so in other words we need to remind ourselves that there is no guarantee whatsoever that defense technological cooperation leads to to a virtual alliance of any kind just underscore that thank you very much now those are three questions that are all quite different can i just make my own comment on those those comments of yours baits i'd i'd also make the comment that um contrary to what certain people have said in recent days in the newspaper and whatnot uh japan australian experience with japan in the commercial sphere and investment sphere is basically second to none in the sense that the japanese honor contracts they continue through with the delivery of the contracts and i think that's very important indeed even if there are possibly divergences later on in how we go about our respective interests in the uh indochina in indoe asia pacific region could i ask the panel to very quickly comment because we've only got five minutes left altogether this might have to be the end of the questions depending upon how brief your responses can be please i'll just respond to one very quickly i mean i wouldn't want to say for a second that the last 70 years is all in peace and light and everything's happy but at the same time to to make the argument that somehow this has always been you know a system that was working not working and broken and this is just a continuation the same it misses what has been a fundamental shift in the last five years alone and that is you need to make the distinction between what's happened on land and what's happened in the sea and what's happened in the global commons and if you look at the global commons you know the south china sea territories are not new they've been there for 25 30 40 years and the united states has regularly challenged the claims of its allies and other countries in the regions every time the philippines say you can't flow through here we'll charge the u.s you know you know navy through there just to prove that that we can go through those traits right uh and that that kind of general order in terms of the global commons in the sea really has been maintained pretty pristine for the last 70 years and it's only the capacity now of china to build new islands to to militarize to declare defense zones that is a fundamental shift and so to say yes yes it's always been a problem and it wasn't pristine before it really i think obfuscates what has been a fundamental shift and i wouldn't want to do that my answer may not repeat a point but i think the current unstable maritime security environment has been brought by brought up by the collapse of the power balance structure since the end of the cold war and the someone say to our power shifting but when it comes to the south china sea the only one state china can influence her control power over the south china sea and so it's good it whether it's good or not but some some nations may seem that the china conduct china is conducting very coercive power or influence assertive operation so they are my idea is they are setting up some favorable power balance condition power balance structure is very much important and so they are in this in this background the capacity building for the south china sea nations from the japan australia are donations are very important thank you alan yeah just quickly on the first question i'm pretty much in the same camp as gordon in terms of my response but you're arguing the con you're making the continuity argument you're like what's new what's different right so my answer to your question is there are a number of differences to this particular first of all there are multiple challenges to the the old order shall we say it's not just china it's also russia it's iran in the middle east you know so so the multiple challenges of a kind that we haven't previously seen because we remember the old order was the contest between the old soviet union and the united states so proxy wars broke out everywhere but they were essentially contained within that framework that doesn't that's breaking down that there is no comparable framework the second thing is that the soviet challenge to pax americana and i'll call it that okay was primarily military and political but not economic because the soviet union imploded essentially because economic it lost the race economically china hasn't made that mistake it's an economic power and a growing one so the challenge is more formidable and as gordon said in this part of the world it's playing out of the maritime domain not on land and that's a critical difference and that's what we're all talking about here so there are you're right there is continuity and it's not a reflection on the resilience of the of pax americana so much as the the complexity of the challenges we haven't talked about islamic state or any of the other things so a lot of challenges to the order the u.s has has been you can argue that there's a relative decline from where it was 20 years ago it does no longer dominates as it once did so it means that we're going to have to look at new levers and new ways of adapting to these challenges and that's a resilience question and can i just say quickly on baits's question about the risk of getting into into a major technology agreement with japan on the submarines there is a downside the risk side and you're absolutely right there is a risk but i don't see that as being a critical risk a because the japanese do deliver right and secondly if you look at the nature of defence agreements in 2016 compared with say sweden you know when we did the colons class 30 years ago they're qualitatively different in the sense that they're much more broad ranging much more a partnership they bring in industry there's all sorts of differences that actually bring greater rewards to the partnership than was the case 30 years ago so i think overall the risks are quite low and that's why that's why we're very happy i think to have japan as a as a bidder all right well we've actually reached our limit but i there are a couple of questions if i can take them miles was one and another one here in front miles kuba was a natural focus on the bilateral dimension of this australia japan partnership brief mentions of some other areas bay of bengal micronesia southeast asia got a few brief mentions mainly economic now australia's worked very hard to develop defence links with southeast asia i'm not sure how big a priority that has been for japan but i'm wondering about the panel's views on the value and the scope for collaboration between australia and japan in the defence and security area with southeast asia thanks miles and the other question here in front thanks very much john blackson from the strategic and defence study centre here at a new terrific panel one question that springs to mind and it's prompted by some of the discussion here this morning or this afternoon is you know how much should we push back the islands have been built they're not going away and they're as legitimate arguably as anyone else's claims sure they're bigger they're more consequential but what realistically can we do about it without really upsetting the apple cart and going where none of us want to go thank you that's a good provocative question to end the session with with the panel like to take either or both of those two questions the last one's too big for for lunch but but there is no question that they're another area of real potential upside for australia japan cooperation is on security in southeast asia because to date the same domestic considerations in japan that limited japan's security cooperation with australia have limited their cooperation with southeast asia and so now you've got an area where australia has actually been on the front foot they've been leading for a long time they've got experience they've got relationship and it's a tremendous area of where australia to say to japan come in let's work together whether it be micronesia or southeast asia so great anybody else can i say something on the last provocative question from john blackstone here um what can we do about as a fader company i hear this all the time so let me answer by asking you a question so what are the consequences of not doing anything what do you think will happen i'll answer it for you okay this is what i think will happen um so essentially china has occupied and military is militarising those islands because there has been no pushback so it's logical to assume that if no there is no pushback then they will continue to build up their military capabilities and then from those essentially unsinkable aircraft carriers in the south china sea exercise effective control over the whole of south china sea but that's not the the end of it right so if they've been successful there if i was in china i'd be thinking why not do this somewhere else okay where else can we do something similar there are lots of opportunities so my point is okay we probably should have actually pushed back earlier and been firmer with china and explaining why we're opposed to it and what we're going to do about it but we're now at this situation where we've been asked the question again so i think that china is responsive to pressures just as any country is so they have their interests and they have their vulnerabilities and pressure points so we need to start pointing out to china that this continues then there are going to be increasing costs for china in continuing to do so the object of this is not to have a war with china but to to persuade the chinese is not in their interest to continue along this policy line that's the point and so we need to marshal all our diplomatic and strategic resources to make that point and there's all sorts of things that can be done but my point is better to start now better late than ever okay