Trade: It’s time to focus on the west

By James Pearson

The Pacific Ocean to our east and Asia to our north dominate Australian foreign policy and defence thinking and loom much larger in the public imagination than the Indian Ocean to our west.

While we are keenly focused on trade tensions across the Pacific and security issues in Asia, Australia’s Defence Minister, Linda Reynolds, has rightly highlighted the strategic importance and commercial potential of the Indian Ocean Rim.

The Australian Chamber of Commerce and Industry has long urged greater economic engagement with the region that stretches from Australia, through South-East Asia to India and beyond to the Middle East and Africa.

It is home to more than three billion people who aspire to higher standards of living, and are increasing their demand for food, water, energy, jobs and investment.

The countries on the Indian Ocean shores have some of the biggest deposits of natural resources in the world and straddle some of the most frequently used shipping lanes supplying goods around the world. While many are developing nations, most of their economies are growing rapidly.

Critically, and unlike Asia or the Pacific, there is no Indian Ocean superpower. This can create a false sense of security and a perception that the region does not deserve as much attention, in defence or economic terms, as the other regions that Australia is part of. But that would be to overlook the growing military presence and aspirations of several countries, and the massive infrastructure investment under way.

The Indian Ocean features in China’s continent-girdling “belt and road” project and its earlier “string of pearls” investments in strategic ports and supply chains.

The belt and road will secure China’s supply lines with land corridors connecting inland China with South-East, South and Central Asia, Russia and Europe; and a sea route connecting China’s coastal regions with the Pacific, Indian Ocean Rim, Middle East and East Africa.

The “string of pearls” threads together seaports and airports across strategic locations covering the South China Sea, the Straits of Malacca, the Indian Ocean, the Persian Gulf and the Arabian Sea. It is supported by increased Chinese diplomatic engagement in the countries bounding the Indian Ocean.

Notwithstanding economic or security concerns, these infrastructure developments make it easier to trade within the region and with the rest of the world.

More trade means more people will be lifted out of poverty, able to buy more of the products and services we offer; and sell goods and provide services to us. It means we can diversify our trading partners to de-risk our economy in the face of potential trade shocks in the Asia-Pacific.

Australia needs to move, and move now, to seize these opportunities before others get in ahead of us. China is not the only player of strategic interest to Australia. Russia, too, is active in the region and is investing in Indian Ocean nations including providing nuclear power stations to Indonesia.

Australia, the United States, Japan and India have moved to counter security concerns by creating the Quadrilateral Security Dialogue and increasing military co-operation within the region, building on the longstanding American military presence in the Middle East.

Australia has long relied on diplomacy, as well as defence, to secure peace and prosperity around and beyond our borders. Since World War II, the peoples of the Asia Pacific have benefited from significant investment and strengthening economic ties, supported by important diplomatic and security initiatives and multilateral institutions.

This framework has supported nations in the region to democratise, embrace trade and investment liberalisation and put bilateral and regional tensions behind them.

Australia can lead the way in deploying these same tools in the Indian Ocean Rim region. With no resident superpower, Australia can be the prime mover in a strong and capable regional leadership group.

The architecture exists, in the Indian Ocean Rim Association, its member states and dialogue partners. The Australian Chamber of Commerce and Industry is actively engaged in IORA, supporting the Department of Foreign Affairs and Trade in programs to empower women in Indian Ocean countries to become entrepreneurs, and using our network of chambers of commerce to boost economic reform and free trade.

The time has come to lift the profile of the Indian Ocean in our thinking about Australia’s future.

The importance of our second sea goes beyond the defence ties outlined by Senator Reynolds.

We need to recognise the opportunity for new trade and investment, particularly as trade tensions affecting our major trading and strategic partners rise and volatility grips global stock markets.

There is no need to have all of our eggs in one basket, when another beckons to our west.