 Okay, welcome back everybody. Everyone can hear me. That's okay. Great. Welcome back to the second session we have. Now we turn to Australia and Japan in a new regional order. And we'll really sort of pick up where we left off from that last question and that last panel about the U.S.-China trade war. But first we want to turn to the Australia-Japan bilateral relationship and think about that bilateral relationship in its broader regional and global context. So both Australia and Japan face major global headwinds from the rising protectionism in the United States and parts of Europe. And we've relied on the United States and Europe for global leadership in the past. The trade war between the United States and China continues to worsen, threatens to spiral into a technology war and there's threats of economic decoupling. So the rise of China was going to be really difficult for us to manage anyway with the huge structural changes in regional and global power. But the Trump administration has made that much harder. It's made that much harder with the uncertainty injected into the system, the undermining of global institutions and the rules that actually we've relied on the United States to uphold in the past and up until very recently. So Australia and Japan both share similar challenges in navigating the alliance relationship with the United States, increasingly unpredictable Trump administration and managing the massive and complicated relationship with China. So to help us understand all these issues and answer some of the questions that were posed at the end of the last session, we have three panellists here. We'll start. I won't introduce everyone at great length because you have the bios in the packs, but Yasuhiki Todo, who's a professor of economics at Waseda University, have worked a lot with Todo Sensei just over the last 12 months in the T20 process, Think20 process, feeding in to Japan's G20 agenda on trade and investment globalization. And we have Amy King, who I think is familiar to everybody here, who's at the Strategic Defense Study Center here at the ANU, who's our go-to person, as you all know, on all things economics and security and the overlap and the major adult supervisor on that for us. And then Melanie Brock, who runs a consultancy, but is really from the real world, and will give us a perspective from Japan where she resides, but also perspective of the bilateral relationship and how she sees Australia doing from a base in Japan. So we'll actually start by talking about supply chains, economic integration, security and decoupling with a presentation from Todo Sensei. Okay, let me walk around. I'm not sure if I can be entertaining, but I'm always telling my students to walk around in the presentation so I have to be, you know, I have to follow my own advice. So first of all, I'd like to thank ANU, particularly Shiro for inviting me to this great conference. I'm very much honored to be here. And today I would like to talk about how Australia and Japan should deal with this current new regional order. And let me start with this current Japan-South Korea trade dispute. In July, the Japanese government tightened control zone exports of three chemicals essential to production of semi-conductors and flood panel screens to South Korea. And in August, the potential target was expanded to products that can be utilized for military purposes. But the Japanese government is arguing that this tightening of export controls is solely for national security purposes because previously some exports from Japan to South Korea were re-exported to some other countries for military purposes. So the Japanese government is saying that it is not ready to the wartime labor issue and also it is often utilized in international trade. So simply saying the Japanese government is saying that this export control is not affecting trade or any economy in the world including Japan, South Korea and other countries. However, I'm a bit skeptical about this argument because negative shocks can propagate through global supply chains and international financial networks. So, for example, one of my studies showed that negative shocks by the Great East Japan Earthquake in 2011 actually propagated through supply chains very quickly affecting the whole Japanese economy of this figure show. And another research of mine examined propagation of the Hurricane Sandy that hit the U.S. East Coast in 2012 through global supply chains. And I found that a negative shock by the Hurricane propagated to the U.S. firms. However, it didn't propagate to firms outside the U.S. or U.S. firms that have a transaction with foreign trade partners. So the implication is that if firms are internationalized, then they have ability to substitute damaged trade partners for new partners so that they can mitigate propagation effect. So that means the diversification of your trade partners is quite important when you think about economic resilience. So given these facts, I predict two opposing possible consequences of Japan-South Korea trade dispute. One is that both Japan and South Korea and other countries in the global economy may hurt substantially. Why? Because Korean semiconductor companies like Samsung are hubs in the global supply chains and also not only direct suppliers and customers, but also indirect suppliers and customers. That means suppliers and suppliers, customers of customers can be affected. So the negative shock, because of the export controls, can propagate very quickly to many, many firms in the world. However, alternatively, there can be another possibility that damages may not be substantial. This is a case, particularly if the Japanese government actually used the export control only for national security purposes, as it claims. So then the negative shock can be minimal and the propagation doesn't happen. And this is also the case if Korean companies can substitute new partners for Japanese suppliers. Obviously, this is very bad for Japan, but good for South Korea and other economies in the world. And this argument can be applied to the current U.S.-China trade conflict or trade war, I could say. The U.S. is now restricting exports to Huawei, but the Huawei is a huge hub in global supply chains. So the negative shock can propagate quickly to the U.S., to China, to everywhere. And recent tariff wars have already shrunk trade between China and Japan, as these figures show. So... China and U.S. China and U.S. trade shrunk, taken from gestural data. But, however, despite these trade conflicts, decoupling of Asian Pacific economies may be very difficult, first, because we rely very much on China already. So these figures show the share of China and other countries in each country's exports and the blue lines, China's share. So you can easily see that everywhere, like U.S., Japan, Australia, South Korea, China's share is increasing very much. And on the other hand, the orange lines show the share of Japan, yellow lines, U.S. share, and they are decreasing everywhere. So looking at South Korea, it is understandable that South Korea is not hesitating to fight against Japan because the importance of Japan has been declining substantially compared with China. And looking at China, the U.S. share, the Japanese share have declined also, very drastically. So, like in 2000, two countries account for 40% of Chinese exports, but now only 20-something percent. So that means China has been successfully diversifying their trade partners so that, again, China could fight against the U.S. now. So now let's look at some other aspects of economic integration, international research collaboration. So this figure shows research collaboration networks among firms. So you can easily see that the U.S., Europe, and China are collaborating closely with each other now. I'm sorry I couldn't show the Australian firms explicitly in this figure, but Australian firms are mostly among this cluster of U.S., Europe, and China. Japan, South Korea, less closely collaborating with other countries, but still you can see that economic integration in terms of innovation around the world. Given these facts, what we should consider is as follows. First, economic integration can promote economic benefits generally to all participants, but still sometimes as currently, national security issues can be more important than economic benefit. However, we still need to consider that like a hostility against foreign countries and the economic stagnation can reinforce each other so that it can lead to devastating consequence. A typical example is the World War II. Now, actually this vicious cycle between like a closeness and economic stagnation is going on. So this figure shows that like 20 to 40 percent of citizens in developed countries think that the international trade creates jobs. That means a majority of people in developed countries are quite skeptical about benefits from globalization. And looking at the views of other countries, for example, it seems that Japan and South Korea simply saying hate each other. The majority of Japanese and South Koreans have an unfavorable view of the other. And in the case of South Korea, it's increasing rapidly after the trade dispute. And this is also the case in the U.S. and China relationship. So, what we need to do? I think still we should have decoupled these economies because the integration can generate a lot of economic benefits. But still, national security issue should also be considered. So one thing we can do is that we set up transparent trade rules for national security. So right now, actually, what kind of exports are controlled or not is not very clear to companies so that the companies are hesitating to invest. For example, if they know everything, then they can decide whether they should invest in other countries than China or South Korea, but they cannot because of uncertainty. So we need to have transparent and clear rules in the first place. And also, diversifying economic partners is very important, as I mentioned earlier. This is for resilience. And in this sense, if transparent and clear rules are given, firms may decide to invest in different countries than China, for example, so that global supply chains or global value chains may be reorganized drastically. But it may be good for Asia Pacific economies because, as we see, we rely very much or maybe too much on China. And this is very risky for economic resilience. I'm not saying that China is a bad trade partner, but I'm just saying that relying on a single country can be very risky. Finally, and most importantly, the relationship between Australia and Japan should be strengthened. Of course, I should say that, but this is particularly important in the current time because for Japanese, we need neighboring partners to deal with Japan's South Korea dispute. And I think for Australia, it is also important because you need to diversify your partner, trade partners or innovation partners, and also you need to diversify industries as well. So the relationship with Japan could be helpful for that purpose. Okay, thank you very much. Thank you for all, Simon. You raised a number of issues, and that does set the scene nicely. I want to come back to a couple of specific issues later on, and I'll just warn the panel. I'm going to ask these questions. You said sometimes national security can be more important than economic benefits. Now, that is an economist who scares me a little bit. Does that conception of security include economic security? Who makes that judgment? Are there better ways of sorting the priorities out? Does a security agency make that judgment? But security is more important than economic benefits. So I'll come back to Amy on that question because you advocated for diversifying economic partners in industries, which sounds pretty sensible, I think, but how to diversify? And I want to come back to Melanie on that to bring a business perspective. Surely business is already diversifying. They see risks. So if we're talking about diversifying further, are we talking about government intervention perhaps? They're obviously going to be costs to diversifying. President Trump is showing how to reduce trade dependence with China quite spectacularly. I don't think you're advocating for that, but we'll come back to those sets of issues as well. But now I'll turn to Amy next and just step back a bit, and I want to ask you, Amy, about how Japan's been managing these big tectonic shifts in power in the region, specifically how Japan's been managing the U.S. relationship and the China relationship. Yeah, thank you. All the presentation, I think, very nicely sets the scene of the range of economic and strategic, broader strategic challenges that a country like Japan is facing, which are particularly acute. I think in a nutshell, I would describe Japan's strategy over the past many years in some ways as attempting to double down on the U.S.-led order, the preferred order that it would like to see in the region, while simultaneously, I guess, subtly trying to augment that order from within. And that means by pursuing some key forms of cooperation with China, particularly in terms of the economic partnership and infrastructure, but also sort of expanding some of the range of partnerships between Japan and other key U.S. allies or partners. Australia obviously being one of those, which are important in themselves for Japan about developing a sort of a broader range of security partnerships, but I think even more significantly are seen as a way of keeping the U.S. engaged in the wider Asia-Pacific, Indo-Pacific region, whatever we want to call it. So this is a strategy that in some ways Japan has really pursued since the early 1950s, it's not new. It very much prefers an ongoing U.S.-led order, but it's not satisfied necessarily with the U.S. vision of what that order would look like. And so, as I suggested, it's looking at ways of working with other key partners, in particular China, to reshape some of the kind of under-regulated areas of that order or some of the evolving areas of that order. So maybe you can go into that a little bit further on the Japan-China relationship. Can you give us some examples of what has Japan been doing with China? Sure. So, I mean, I think as probably most of the people in this room would know, the Japan-China relationship was really at a low point for many years from about 2010, particularly in 2012, through to sort of 2014 or so. And things, I think, shifted pretty significantly in 2016-2017 and then were very much bedded down with a series of high-level bilateral visits between the two sides in 2017 and 2018 and the signing in particular of a whole host of memorandums of understanding around joint cooperation between the two sides on around 50 or so joint infrastructure projects. Around that were a whole host of other sort of joint agreements and sort of a pledge to shift the relationship in a more cooperative direction and agreements on things like maritime and communications mechanisms to help deal with some of the immediate tensions in the East China Sea. But I think it's the area of infrastructure that's particularly interesting because, of course, this is an area where Japan has had a long-standing kind of leadership role, particularly in Southeast Asia. It has been a major provider of infrastructure to the region and through its role in the Asian Development Bank. Then China, of course, emerges on the scene with both the AIIB and the Belt and Road Initiative. And I think for many analysts looking at the region, we would see these as fundamentally competitive approaches. China sort of offering something that Japan and other countries were unable to offer. And certainly I think there are some competitive elements to the infrastructure approaches being offered. And Japan has very clearly tried to demonstrate or differentiate what it offers from China, focusing in particular on the quality, the sustainability, the economic efficiency, the transparency of its approaches to infrastructure investment in developing countries. And partnering with more traditional countries and traditional allies and partners like Australia and the United States in these kinds of... in sort of enhancing its infrastructure investment in the region. But Japan is simultaneously trying to shape China's very large investments through Belt and Road and other initiatives. And particularly by working with a series of Chinese agencies. So we see cooperation between, for example, Japan Bank for International Cooperation and the China Development Bank and a range of other actors where joint MOUs are being signed, where Japan is trying to get the Chinese partner to sign on to its own high-quality principles around infrastructure investment. And the Chinese side is actually willing to come to the table and actually willing to sort of... And if you speak to sort of Chinese analysts to work on the Belt and Road, they would say that they see Japan's practices as being kind of the world's best standards in many regards. So they see some, I think, virtue in working with Japan on this. Japan, I think, is playing a really creative role here in trying to multilateralize its sort of high-quality principles through the G7, through the G20, most recently at the Osaka G20, but also working with the key kind of country, China, that is perhaps seen to be not playing by the same standards and trying to, I guess, shape those through close engagement with Chinese institutions rolling out infrastructure projects. Now, we're still at the kind of the normative level, I guess. We're yet to see a lot of this being rolled out in practice. So that will be the next stage of analysis, I think, in looking at, you know, the proof will be in the pudding, I suppose, of what that looks like on the ground. But certainly, I think we're seeing quite a bit of activity there on the Japanese side. So while Abe's been very successful with President Trump in creating a close relationship, and I think we'll hear a lot about that after lunch in the session on politics, but also getting reassurances on Article 5 covering Senkaku Islands and the territorial areas under dispute, and then effectively agreeing to buy a lot of corn as a price for some of that agreement in the latest round of negotiations, trade negotiations with the United States, Japan's successfully shaping... Well, coming closer with China, but shaping the big Chinese external Belt and Road Initiative. As you mentioned, it's not part of the Belt and Road Initiative, but these joint infrastructure projects, you know, Japan's not going to undertake them unless they agree to the standards and principles. And if you listen to the rhetoric, at least, of the second Belt and Road Forum, it's very much adopting the quality infrastructure principles that Japan has been pushing, as you said, in the G7, G20. So before I move to Melanie and ask a question, how has Australia been navigating the China and Australia relationships? Well, I think, I mean, there's an enormous amount that could be said there, and clearly I think it's a relationship that Australian government analysts, the Australian government analysts have regarded as very important and clearly creating enormous ruptures in how we think about kind of the regional order. But what our relationship with China should actually be and the strategy we need to get there, I think, is something that we've yet to see as sort of a clear answer on. Now, Scott Morrison's major speech on the eve of the G20, I think, went a lot further in sort of basically explicitly stating that Australia wanted to work closely with China and with the United States in reshaping an order that both could participate in, in acknowledging that this was an order that was under strain and that both sides needed to do more on areas that were, as I said, under-regulated and to make an order, particularly in the economic and trade sense that was in the interest of both sides. I think that's very positive and sort of sets out a view of the region more in line with many of our partners in Southeast Asia, in particular countries like Singapore, which is helpful if you want to work with other countries in the region in pursuing a joined up strategy. We haven't then yet sort of gone the next step, I think, in thinking about what we might do productively with China to actually make that vision a reality. And so I think here looking to some of the ways in which Japan has perhaps put that into more concrete practice might be helpful for Australia and actually coming up with some serious experiments, policy initiatives that actually put Australian and Chinese businesses or government agencies together to actually nut out some of the kind of the areas of mutual misunderstanding, for instance, or areas that we actually might have complementary approaches to aid, for instance, development in the Pacific might be ways in which we could think about kind of putting some real policy in place to sort of meet that vision. Okay. Melanie, I want to ask you about the Australia-Japan bilateral relationship. But before I do, maybe you sitting in Japan and working with business, how do you see the difference in approach between Australia and Japan in how we deal with China or the United States? So Amy paints a picture of Japan that's a little bit more strategic and a little bit more clear-headed in what it wants from China perhaps than Australia. Do you buy that? Can I say something before I answer that giant tricky mega question that could put me into great strife by offering a few caveats over what I'm about to say in any case? I just first of all wanted to say thank you for inviting us to be on this panel because it's been a long time in the Australia-Japan space that we've had a panel of gender balance. So for that I'm grateful. Long may that reign. So all those on Twitter accounts send that out now. The second thing I'd say is that, unlike our former Speaker, I'm going to show Peter Drysdale that I actually can do as I'm told occasionally and I'll remain seated throughout my break. Because that's just how I'm going to do it. But also thirdly to say that in the program my hair is quite dark and I have not, because I live in Japan, aged dramatically. It's just that I've embraced the new black, which is the grey. But I think for Japanese business at the moment and I certainly can't speak on behalf of all Japanese business and it's hard for me, I guess, because I'm a generalist and I just happen to live in Japan and I hear a lot of things and I am told a lot of things which I try and take on face value but later look at that through my own prison which is of course being an Australian based in Japan. So when I look at the Japan-China relationship I'm reminded of conversations that I've had with senior Japanese business leaders who are quick to remind us of the importance of the commercial relationship between Japan and China and the very stable nature of that relationship and I'm saying that at the moment with Korea that the business leaders will very quickly say look it might be the case at political level there's a great range of angst and antagonism and promotion of anti-Korean and anti-Japanese and vice-versa's media but that the businesses are in fact trying to deal with this uncertainty and this pressure by doing what they do which is relying on those commercial partnerships and embarking on new investments or posting more people to those countries and the like so I think there's a great importance I think the business community can in fact show us what's really happening over and above some of the noise and in times of global uncertainty I think that it's trickier for the Japanese business community than ever before because of issues like Brexit for example at the same time as they've had great political stability with the Prime Minister who's there Abe and I think they welcomed that political stability and they thrive on the fact that they have had this terrific sort of administration in place they've had to deal with the US, China the US, Japan trade discussions at the moment and the uncertainty that that brings Japanese agriculture, Japanese business etc they've had to look at the North Korea situation they know about the Korea peninsula and its problems they've got the Korea, Japan and US security issues to deal with they've got all of the issues that have been created today by the Prime Minister of the United Kingdom so there are a number of areas where Japanese investment trends are driven by people who are having to make decisions based on the information that they have and it's changing so quickly that it's very very difficult for people to keep up insofar as how I see that plays out for Australia, Japan but once again I'm not a professional I'm not an analyst, I'm not an academic so I don't certainly have that background but what I do see is that there is a tendency for people to talk about the importance of the Australia-Japan relationship in amongst this global or this period of global uncertainty without coming up with the next set of ideas I think about how we can embrace that and I take your point about perhaps agencies having more discussions you're talking about Australia and China for example but those things are obviously taking place I've got Bruce Miller here who knows of the great change that took place during your time as Ambassador and also Murray McLean who saw a big shift through a commitment to trade liberalisation as it could be so I think those initiatives are there but where I, and you'll forgive me just for going on a bit but I feel that the Australia-Japan relationship just needs a great big push it needs a big oomph moment and I don't know who is responsible for that I think it's easy to say it needs to be business and I think that's important because they're driving it it's easy to say it needs to be leader to leader but that's unfair on both of those leaders to take that it's easy to say that something like this is driving it and whilst it's adding to that but I think that we need to be mindful of how we engage with younger audiences in terms of the Australia-Japan relationship I think we've got a tendency to be a little bit old about it and I'm obviously in that pack although in Japan I'm quite young I must say so I love that and that's why I live there don't ever ever worry about that but I do think that you know I feel strongly that the Australia-Japan relationship is solid and I feel that it's built on great foundations and the great work that's been done by so many people including in this room but I just wonder are we doing enough now and today I think we should turn to our media and look at how they play this for us because I know in the time that I've been in Japan which is now nearly 30 years we've now only got one correspondent working for the Australian ABC which means that stories about Japan just simply don't get reported back here and so I think it's up to all of us and our various engagements to raise that profile such that we can have a better discussion about are we doing enough? Is Japan doing enough? Because without looking at ourselves we possibly can't then call on Japan to take a stronger play in what we do to your point earlier about how that plays out in the security piece in particular Did that answer anything? That answered a lot and raised a lot of issues and I should just make a plug for your regular column in the FIN review postcards from Tokyo so the next one is on the day I was just checking it but I think it's probably not well anyway it's a bit rushed but I talk in that one about brand Australia and are we doing enough to look at are we doing enough to listen to our Japanese colleagues about what they want from Australian tourism we've got all these wonderful areas of focus I think in the Australia-Japan business and commercial relationship are we listening enough to what Japanese are telling us or are we really simply pitching a boomerang and a kangaroo too often sorry I had to say it quite again So Amy, whether we get that oomph and sort of elevate the bilateral relationship or not what can Australia and Japan do together we share a lot of similar challenges we can maybe think about the two countries as anchors in this part of the world interested in maintaining openness and stability what can Australia and Japan do in this environment I think that has to be a first prior question is before we think about what can we do is what do we actually want from the relationship and from the broader region as well because unless that's reasonably closely shared in what we want from each other and from the broader regional order I think any kind of initiatives will be fairly misplaced or potentially go nowhere and look I think there is a large degree of overlap in terms of things that both countries want they clearly have a deep commitment to the multilateral order to trade liberalisation to increasing that liberalisation to other sectors to a security order that is rules based and open to kind of the provide security for countries of all sizes large and small I think there is also a degree of overlap in view which is helpful that while both are clearly US allies and would prefer the United States to be the leading power in the region and their precise views on that I think are clearly changing to some degree but they are both of the view that orders do need to change Japan has had a long history with itself being a rising power within a US led order and an order that was fairly stubbornly resistant when Japan was rising in the 60s, 70s and 80s and putting forward initiatives and trying to have a greater say in voting rights at the IMF and WTO is fairly resistant in many ways that are not dissimilar to the language and rhetoric that we see coming out of the United States today but Japan has quietly tried where it can to reform the order through things like the Asian Development Bank through working with Australia on APEC and these sorts of issues so I think that shared history is actually a really important part of the relationship so it means thinking about countries that have a history of participating in an evolving order what do we want from that order to change in the future and I think for both sides it's clearly looking at that key relationship between the US and China and finding ways to strengthen rules around intellectual property protection or transfer of technology or perhaps thinking more creatively about the key challenges between the US and China and other Southeast Asian states and how they may be modified so I think there is a lot that Australia and Japan could be productively doing together So that would suggest that when our Prime Minister says this is the trade war we had to have and just implies that we let it play out we're not innocent bystanders here Australia and Japan you're welcome to but also what can Japan be doing now it's not just an innocent bystand obviously in this space and just pick up the pieces after US and China either come to a deal or further damage the system what should Japan be doing for the Japan-Australia relationship for the US-China trade war First of all I want to say something about the Australia and Japan relationship so Meron you just said we need a big push but I think this trade conflicts can be a big push because it's reorganizing everything including global supply chains and national security issues so I think now we are given a great opportunity to rethink about our relationship between us but still the new relationship should be quite new shouldn't be like Australia exporting a beef and a PG and Japan exporting automobiles it's not like that so as I mentioned earlier innovation is very important in the economic integration but I think we need stronger relations between us in terms of innovation like research cooperation so actually I'm now visiting the University of Sydney since last April and doing research cooperation to join research with my colleague in the University of Sydney so that's a good example so I think the Japanese government and also of course the Australia government can support these research cooperation between us so that's a very important issue but do we just I completely agree with you on that point of how we drive it or how we drive it in these rather uncertain times and I think that it's very quick to call on government to take that lead and to be the drivers of that but I think it's incumbent on business to look at what those opportunities might be in that very tricky time I saw today that the Nikkei had a piece on Australian Echo coffee cups you know like that we don't and I'm very grateful to this student who brought me a coffee today thank goodness for you and I felt terrible that I'm about to speak about the Echo cups or whatever they call them here what are they recycling and of course in Japan they're simply not a feature of your daily purchase because everything is either in a coffee can from the vending machine or it's from Starbucks and it's some paper but I thought that was an interesting story to be carried in the Nikkei about Australia and if I was an Australian business if I was an Australian business that was create like manufacturing or marketing those coffee cups I'd be up there tomorrow trying to build on that and that means that you know at this time when everybody's saying yes one of the important relationships that we have is Australia, Japan because of everything else that's going on here then we should be reading the trends in Japanese sort of in Japan i.e. this move to Echo to be more focused on environmental issues we should be looking at that and then on that particular issue saying okay we're going to send up the company tomorrow but it's very hard for business I think to focus on Japan and all the benefits in China and so it's become this them or like China or Japan on many areas I think and that's simply not the case the other thing I'd say is that somebody once described the Australia-Japan relationship as a relationship of an old couple an old married couple and I think it's an atrocious analogy I think it's mean also to all of those married couples who actually love each other because it's suggesting that it's tired that it's lacking any oomph maybe you know and that it needs a trade war to revive it and I don't think that's the case I think the Australia-Japan relationship is in good form but I don't think we do enough to think about where we could very quickly and nimbly jump in and fix those stories I don't know well let me open it up to the floor in a second but first can I answer to your last question I think I didn't answer to your question so so more generally I think what we need to do now is to stop the very catastrophic consequence like the actual war not you know trade war so I'm an economist international economist so I like to say always opening up the economy is good and I said that last year when I did a presentation in front of a shiro in Japan but now things went too far if you look at the Japanese websites every day people write a very bad thing about South Korea so I think simply saying okay opening up the economy is very good so we need to do that it's not enough at this moment so I think at least we should take national security issues into account to achieve like a soft landing so that's I think the big issue now again the clear trade rules setting up clear trade rules is the first step for that matter and of course in that sense the governments everywhere should do something I suppose in one sense just opening up to trade has never been enough the Australian experience of a lot of other countries shows that you need flanking policies a strong social safety net to make sure the gains from trade and technological innovation are spread across society to be able to sustain that openness and if you don't get those things right you know exhibit A is the rise of Trump and the rise of protectionism and nationalism but you did bring us back to a point you raised that I wanted to talk about on the balance of economics and security and I might bring Amy into this because it's not always about opening up security risks but how do we balance these because should we be listening to the security agencies and reducing our economic interdependence with China should Japan be doing so should Japanese business be discouraged from investing in China with policies or other incentives so I guess there's a couple of ways of an immediate policy question and pointed out by Todosan about how a government might respond to an immediate national security concern with sets of policies and Japan, Australia and others have put limits in place to prevent for example Chinese investment in 5G infrastructure but I think this question about the relationship between national security and economic interdependence is a much, much deeper one and here looking at the Japan-China or the US-China relationship sort of over the long term is really instructive because these are relationships where in spite of the fact that there has been a deep sort of adversarial security relationship between the two countries there have been equally important economic ties it's never been a trade-off and these countries have actually not thought about it in terms of a trade-off so if you look on the Chinese side for instance in why they pursued such close economic ties with Japan from the minute after World War II is over and in fact during the war but we won't get into that but the minute after World War II is over it's because of the national security threat that Japan poses it's because countries say what we need access to technology infrastructure to industrial goods we need those things to make ourselves secure to develop not only our economies but also our militaries and where do we get that we get that through economic openness with third-party countries looking at the US-China relationship again and Hugo Meier's work is really useful here in thinking sort of much more recently about how different agencies within the US Department of Defense and elsewhere have thought about that relationship with China they very actively recognize this is particularly during the George H.W. Bush and Clinton administrations that it would actually harm US not only economic interests but national security interests if they completely blocked off or transfer critical technologies with China because they'd lose a really fundamental market China was going to get those things anyway on the open market from Japan or from Europe and the key goal actually was for the United States to stay one step ahead and by limiting your economic interaction with China by preventing top scientists from Chinese institutions from studying in the United States by preventing that economic and intellectual and technological engagement you're actually harming not only the US economy but also the US national technology now that's a view that has clearly shifted under the Trump administration but I think the fundamentals of that explanation have not changed and so in fact the deep problem at the heart of Trump's I don't want to call it strategy because it's not strategy it's sort of a bunch of kind of thought bubbles and tweets and such is that decoupling is ultimately going to harm the United States and the only way for the United States to remain competitive in this area is to pursue engagement in China with particularly in technologies where China is now actually moving ahead cutting oneself off is not actually going to aid the United States in this area. So it's economic integration that mitigates security risks and looking at the Japan-China case now as you said Japanese firms that have invested in China they constrain behaviour the worst nationalistic aspects of behaviour by Japanese politicians in fact Chinese politicians too that need Japanese technology so what is the same in Korea at the moment whereby you know you've got as you suggested there every day some very inflammatory statements well a lot of inflammatory statements being made in the press every day on both sides of course and one of the areas of great change in Japan over the last three or four years has been the influx of foreign tourists and of course the second largest market for Japan of inbound tourists is Korea and the I think it's close to 8 million tourists came last year and they're predicting that a third of those tourists won't come to Japan as a result of the Japan-South Korea rift fight what it be like of issues what that does of course is it impacts on business communities in the Kyushu region mostly and western Japan and if the Japanese central government's push has been anything in the last while and related to the Rugby World Cup of course is regional revitalisation and so of course that impacts directly on some of those areas that the central government has been trying to support so sometimes these things can't be seen in just a simple exercise but the Korean is playing out daily in Japan at the moment in the press and the audience what do you call it the ratings for the programs whereby the commentator is of course more well vicious sometimes in their statements of course shooting right through the roof okay I'm managing time poorly but we'll finally get to the questions we've got the first question here we'll take two or three at once and then I'll respond. Thank you very much and thank you for allowing me to go first improving the gender balance of the questions Harriet Bailey I'm from Syro CSIRO Australia's National Science Agency really pleased to hear more brought out in this panel about the importance of research collaboration and that science and technology aspects we've been talking about needing a big push do you think that increasing or how much do you think increasing research and scientific collaboration can actually help in that there's a common understanding that that helps with our increasing our people-to-people links but how much economically do we think that that can really be part of improving our economic integration next question up there and then we'll follow with the question so this is probably for Dr King first but in talking about the nexus between security and economic issues at least looking in Australia it seems that often issues that could kind of fit into that nexus so things like foreign investment in Australia or like aid in the Pacific are often very heavily dominated by security discourse in the media and are often debated institutionally in security dominant spaces so like the question around joining the AWIB was carried out by the National Security Committee of Cabinet so I guess I was just curious when we look at Japan do they have a similar problem with these sorts of hybrid issues being very heavily securitised are there lessons we can learn about how to better conceptualise them in that sort of hybrid way the sort of way that they exist two great questions we'll fill up with a third just stop there I am Nina I'm really happy to be here hearing insights from wonderful panels I have question to Professor Toto I agree with his argument in a sense that sometimes national security is more important at economic benefits and I agree we have to diversify economic partnership with other countries but I have a slightly different view when it comes to the argument that bilateral relations between Korea and Japan are similar to that of US and China because there is a strategic rivalry between US and China there is no problem between Japan and Korea we have Japan and Korea have cooperated in various areas and two countries even are sharing very sensitive military information through bilateral and trilateral international agreement and I heard that Korea is part of four major international expert control regimes so I'm wondering why you think that relations between Korea and Japan are similar to that of US and China and my second question is that we have to develop transparent trade norms for national security so how do you think that can be that can happen possible preventing other countries from using that kind of trade norms justificating their expert restrictive measures, thank you who would like to go first actually the first question is excellent because I have done research on this the effect of collaboration basically I found that China does international research collaboration then the quality of its innovation measured by patent citations and the number of patent citations they improve by like 30% comparing with 50% of the effect of domestic collaboration so the effect of international collaboration is quite high and actually when you look at the effect by country the China benefited substantially the effect of international collaboration on Chinese firms innovation performance is like 100% or more so obviously the Chinese firms learned a lot from research collaboration with mostly US firms in the universities so in this sense the President Trump is not too wrong Chinese are benefiting greatly from collaboration about FDI so in Japan we also have regulations on FDI in flows and the government can restrict FDI because of the security issues but I think in terms of FDI FDI in flows to Japan is too small so compared with other countries it's almost negligible so I think FDI should be coming more to Japan so in this sense I'm afraid that the government has used too much the restrictions on FDI but still they can regulate and also the similarity between Japan South Korea relations and the US China relations I didn't say they are similar but the conclusion from the Japan South Korea analysis that the negative can propagate through supply chains can be applied to the US relationship and what is the last one you don't have to answer all the questions let me just pursue briefly you said so Trump's not wrong on the research collaboration thing because China seems to be gaining relatively more from collaboration and you'd expect that there's a catch up economy in a way you're not advocating you're not suggesting that research collaboration is a zero-sum game of course of course the US firms are also benefiting from international collaboration but yeah I just wanted to answer the question where I can on research and I think that this is an area obviously I would advocate for research especially between Australia and Japan but maybe also Australia Japan and third country as businesses looking at engaging in third country with Japanese capital and Australian expertise in particularly Asia Pacific so for example but I would encourage universities where it's possible or think tanks or groups like Syro for example to work with some of the existing networks in Japan and this is where I think we can get that all going through some of the younger groups you know for example the Australian New Zealand Chamber of Commerce it's not certainly a young group because it's been going for quite some time but it would very much welcome some opportunity to look at some of the possibilities the Australia Japan youth dialogue the Australia Japan business cooperation committees future leaders I can imagine that's embedding or somehow collaborating or working with some of the people who are active in those groups would be terrific for for the institutions back here but more importantly for getting that on the ground expertise about what is in fact happening and the other thing I just say at the very end is that I've talked a lot about young people, young people and old isn't bad let's face it in Japan we have this absolutely wonderful system called the Shidaba Jinzai and anybody with grey hair is of course Shidaba and so I have a very small business and so I was wondering how I could hire because as Sakaki Barasensei was saying there's simply no opportunity it's very very hard to hire anybody at the moment so I rang the local council and for 20 years or 30 years now I've been registered as a Shidaba Jinzai something something in person and I put out a request for somebody who would help me with just basic bookkeeping and I had two applicants come and one was just to help me do things because I'm a bit of a mess and so I asked for two applicants to come and meet with me and they presented their CVs and of course their CVs always have a photo and their age which of course is hideous let's do research on that and how it impacts on labour, flow etc but I was fascinated to see that one of the women was 75 and she was going to be doing all of the bookkeeping for me and 78 for the woman who's helping me just keep myself in sorts and help me that there is just incredible wealth in the workforce whereby they are simply not able to work anymore in structures like we've been discussing but there's that opportunity so maybe research around ageing and research around gender in pure practical areas where we can as Australia and Australian businesses learn more about what challenges we're likely to face in the future anyway I just want to ask a question we don't have any more hands flying up so we might let Amy have the final word a good question and I think yes we see very similar stove piping on the Japanese side and one of the reasons why I think we see this mixed approach to cooperative infrastructure with China on the one hand we see an open Indo-Pacific strategy with the U.S. and others on the other is that we have competition between METI pursuing the relationship with China in particular and leading in that and MOFA on the the more traditional U.S. side and ultimately what was a decision to sign those agreements with China was a very hard fought political battle internally within China the other thing I'd say though is that historically at different points broad definitions of what security means and so comprehensive notions of security have often been led by key political figures which have helped to sort of bridge some of those trade-offs that we might find unhelpful so that might be another productive way to think about that we've heard from our diverse panel micro, macro, the real world strategic issues we didn't come to too many answers on the trade war but I like the takeaways that we need to be working together in areas that do help multilateralise some of the issues the IP protections infrastructure issues and other issues around that the bilateral relationship needs an oomph like a big boot up the backside don't quote me on that that was me and then all the difficult issues around the Japan-Korea relationship and how Japan is going to work that out but also manage the US relationship and the China relationship and I think we're going to come back to many more of the issues these issues in the session after lunch on the politics and foreign policy I think that's more than enough for now and we can enjoy our lunch so please join me in thanking our panel