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Asia-Pacific Collaboration: Opportunities and Threats


The strength of Australia’s economy and its opportunities for trade with other countries are represented by the country’s unique position. During the past twenty years, the sizes of the economies in the Asia-Pacific region have grown significantly, as illustrated by their rising GDPs. Therefore, Australia gets strong and reliable partners with which it can collaborate to facilitate free trade agreements, with the expanding network providing a more comprehensive range for trade and investment opportunities. With opportunities come threats, and it is essential to identify both areas of influence that can either push the economy toward new accomplishments or prevent it from achieving them.

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Trade and Investment Opportunities

Closeness to the Asia-Pacific region is essential for Australia because the country’s natural resources and agricultural products have been attractive to partners, thus helping drive its growth. Moreover, the increased demand of the Asian population for Australia’s education, tourism, and other professional services can help boost the state’s economy. Australian businesses, communities, and exporters have been expanding their footprint throughout the Asian region to use the demand for Aussie products and services to their advantage. For instance, between 2017 and 2018, trade with Asia amounted to two-thirds of Australia’s two-way trade of goods and services (Tang, 2019). Twelve economies out of Australia’s top fifteen partners in trading are in the Asia-Pacific region.

At the same time, such rich economies as Singapore, Japan, China, and Hong Kong have become substantial foreign direct investment (FDI) sources into Australia. The mentioned economies’ stock of FDI in Australia has increased by 11% per year from 2011 to 2017, reaching AUD 186 billion (Tang, 2019). This amount is comparable to the FDI stock value of AUD 190 billion being invested into Australia from the US, with the growth being estimated at 8.6% per year for the same period (Tang, 2019). Thus, the consistency of investment into Australia from the Asia-Pacific economies presents significant opportunities for growth because of the mutual benefits that two-way trade can bring.

Asia-Pacific Economic Cooperation Opportunities

The Asia-Pacific Economic Cooperation (APEC) is a success story that emerged from the cooperation between the economies involved. The partners participating in the forum make up more than 70% of Australia’s total trade in goods and services, with closer regional economic integration adding to the country’s economic expansion and prosperity (Tang, 2019). The opportunities that the cooperation presents to Australia and its partners include the liberalization and the continuous facilitation of trade, the reduced costs of cross-border trade, both technical and economic cooperation, the sharing of best practices and information on investment and trade, as well as enhanced capacity of financial institutions to take advantage of trade benefits and reforms in the area of investment. Under the APEC’s (2020) vision for 2040, the economies involved strive to establish an open, dynamic, and sustainable community of partners through pursuing important economic drivers. These include trade and investment, digitalization and innovation, as well as balanced and secure growth.

Because Australia is a founding member of APEC, it is among the key economies behind driving the advancement of regional financial integration and progress in open trade and investment. Australia has been estimated to spend around $4.5 million each year on capacity-building activities that can help the economies involved benefit from several advantages (“APEC Australia,” 2021). Namely, the capacity-building activities allow for the funding of projects that aim at APEC priorities such as supply chain connectivity and structural reforms, the support of research and analysis of the forum-related economic policies, and the support of reforms in project management to improve the effectiveness of relationships within APEC.

Cooperation Opportunities

For Australia, there are several priorities associated with working within the APEC cooperation. Specifically, the economies involved cooperate to support the recovery of the region from COVID-19, promote the liberalization of trade and investment, and facilitate sustainable and inclusive growth. Moreover, there have been discussions regarding the vast opportunities to develop initiatives supporting Indigenous and female-owned businesses as well as widening the access of minority populations to opportunities for business expansion. All of the abovementioned opportunities are made possible by facilitating work on structural reforms and advancing the digital agenda. With the help of such reforms, the Asia-Pacific alliances with Australia also have the opportunity to build resilient international supply chains. As a result of the COVID-19 pandemic, the supply chains have transformed significantly, with the reliance on Chinese manufacturing capacities disrupting supplies in partner states. This encouraged countries to increase investment in domestic production and the automation of processes within supply chains (Harapko, 2021). Therefore, even though the pandemic had detrimental effects on supply chains in the region, there are opportunities for expansion and redesign.

Specifically, there is an opportunity to facilitate a shift from linear supply chains to integrated networks that connect many parties. As aligned with APEC’s strategic priorities, the future of supply chains is likely to be autonomous and digitally advanced, with the economies involved working toward establishing frameworks within which automation becomes the center of the critical processes. Regarding the sustainable growth issue, APEC countries constitute around 60% of the global electricity demand; in 2013, the region’s share of carbon emissions within the total world carbon emissions was 72% (Zafar et al., 2018). Therefore, it was decided by the officials of APEC countries to double their renewable energy shares by 2030 and develop shared goals and policies within the organization to facilitate the shift towards alternative energy sources. Since then, APEC has served as a platform for countries of the region to coordinate and support their energy policies to decarbonize their economies.

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Diplomatic Opportunities

A significant development that concerns Australia’s opportunities when engaging in trade in the Asia-Pacific region entails the country’s diplomatic contribution to ending the ‘deep freeze’ with China. China has recently announced that it was implementing active research into joining a region-wide trade involving Australia and other trading nations in the Asia-Pacific (Walker, 2021). This falls in line with China’s plan to intensify its relationships with closest neighbors within a ‘dual-core’ geopolitical and economic strategy (Yu, 2016). China has been aiming to create a ‘Community of Common Destiny’ composed of neighboring countries united by common development goals, economic integration, and mutual trust.

As an essential player in trade relations, Australia has nothing to lose by supporting China’s desire to explore trade agreement opportunities that seized their existence in 2016 when the economy was excluded from the Trans-Pacific Partnership (TPP). Moreover, Canberra had the option of separating itself from the relationship between Washington and Beijing (Walker, 2021). Therefore, attention should be paid to facilitating the smart trade diplomacy narrative in contrast to the “joined-at-the-hip-to-the-US” approach (Walker, 2021, para. 26). China’s honest interest in engaging in broader trade in the region can help Australia seize its opportunities.

Inequality of Benefits Threats

While there are broad opportunities for expansion associated with Australia’s collaboration with Asia-Pacific economies, there are also threats that limit the effectiveness of the trade between the mentioned economies. Specifically, the involvement in TPP enables high-income workers to reap the most benefits. Free trade agreements result in income inequality in the context of high-wage states as well as the promotion of cheaper products from low-wage countries (Williamson et al., 2016). This is particularly applicable for the TPP because the agreement protected copyright and patents, with higher-paid intellectual property owners receiving more income gains. Importantly, when there are workers in Vietnam who are intended to survive on around $2.50 a day in rural areas, there is almost no opportunity for them to get access to the market benefits that the TPP promised to provide (Amadeo, 2021).

Even though job creation is beneficial for the overall economy, the shift to offshoring and other methods threatens the development of the employment market. Another threat represented by the cooperation entails limitations in incentives targeted at environmental protection and sustainability. Even though some components of the TPP was intended to introduce policies to protect the environment, the pressures from the competitive business work and increased international trade do not allow for the protection of the environment in some countries.

Front End Focus Threats

Another threat is represented by the increased focus on the front end of the supply chain. Specifically, the collaboration between Australia and the countries in the Asia-Pacific region shows that the agreement focuses disproportionately on the supply chain’s front end. Therefore, most of the opportunities for new jobs will be in member-nations that have the lowest living standards; for example, Vietnam. Moreover, high-paying jobs in developed and wealthier nations are highly likely to fade away, with organizations depending on the matrix of import-export for ensuring high profitability levels.


To conclude, the collaboration between Australia and other economies in the Asia-Pacific region presents numerous opportunities for development, ranging from the increased attention to digital trade and structural reforms to promote sustainable and inclusive growth among the economies involved. The continuous collaboration of economies has the potential to transform supply chains, which have been disrupted by the spread of the pandemic. However, there are threats to economic success within collaborative efforts of nations, such as the concentration of wealth in more advanced and more affluent economies, which inevitably will result in income inequality and the reliance on cheap labor to facilitate sustainable trade relationships.


Amadeo, K. (2021). Trans-pacific partnership summary, pros and cons.

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APEC. (2020). APEC Putrajaya Vision 2040

APEC Australia. (2021).

Harapko, S. (2021). How COVID-19 impacted supply chains and what comes next. 

Tang, E. (2019). Australia’s trade and investment linked to Asia’s powerhouse economies. Web.

Walker, T. (2021). Australia has a great chance to engage in trade diplomacy with China, and it must take it. The Conversation.

Williamson, I., Pinkert, D., Johanson, D., Broadbent, M., Kieff, S., & Schmidtlein, R. (2016). Economic impact of trade agreements implemented under trade authorities procedures, 2016 report.

Yu, L. (2016). China – Australia strategic partnership in the context of China’s grand peripheral diplomacy. Cambridge Review of International Affairs, 29(2), 740-760. DOI: 10.1080/09557571.2015.1119424

Zafar, M.W., Shahbaz, M., Hou, F., & Sinha, A. (2018). From nonrenewable to renewable energy and its impact on economic growth: The role of research and development expenditures in Asia-Pacific Economic Cooperation countries. Journal of Cleaner Production, 212, 1166-1178. DOI: 10.1016/j.jclepro.2018.12.081

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