Updated January 25, 2022
Australia
Overview
Figure 1. Australia in Brief
Australia is important to Congress because it is a key U.S.
ally and trade and investment partner at a time of increasing
geopolitical uncertainty in the Indo-Pacific. The United
States and Australia enjoy close people-to-people, trade and
investment, political, cultural, intelligence, defense, and
alliance relations. In recent years, as Australia’s relations
with China have become strained, Australia and the United
States have strengthened their partnership to address the
geopolitical uncertainty in the region. This includes the
announcement of the Australia, United Kingdom, United
States (AUKUS) agreement, which is to provide Australia
with nuclear propulsion technology for its next generation
submarines. Ties between the United States, Australia,
Japan, and India have been boosted by the developing
Quadrilateral Security Dialogue known as the “Quad.” In
addition, Australia signed a reciprocal access agreement
with Japan—another close U.S. ally—in January 2022
designed to facilitate closer defense cooperation between

the two nations.
Background
Economics and Trade
Australia’s economy is projected to rebound after setbacks
Australia was first inhabited between 40,000 and 60,000
due to the Coronavirus Disease 2019 (COVID-19)
years ago. The Aboriginal population were hunter-gatherers
pandemic. Australian exports include raw materials, energy,
with a complex spiritual culture focusing on creation myths,
agriculture, tourism, and education, with Australia among
rituals, laws, and connections to ancestors and the
the world’s top three exporters of resources and energy.
Australian landscape. Captain James Cook claimed
China is Australia’s largest two-way trade partner in goods
Australia for Britain in 1770, and in 1788 the first European
and services and accounts for approximately one-third of
settlement, largely made up of British convicts, was
Australia’s trade with the world. Although the Australia-
established. Australia evolved into a pastoral settler society
China Free Trade Agreement came into force in 2015,
based on sheep, wool, and minerals. Despite the centrality
of the “bush” or the “outback” to the national myth,
China has restricted some imports from Australia. Despite
this, Australian exports to China increased significantly in
Australia more recently has evolved into an urbanized
2021. The Australia-United States Free Trade Agreement
society. While geographically situated in the Indo-Pacific
(AUSFTA) came into force in 2005. In 2020, the U.S.
region, Australia continues to have deep cultural ties to
goods trade surplus with Australia totaled $9 billion and the
Britain, the United States, and Europe.
U.S. services trade surplus with Australia totaled $9.3
Political Setting
billion. In 2019-2020, the United States was Australia’s
second largest two-way trade partner in goods and services,
Australia is an independent nation within the British
and the United States was the largest investor in Australia.
Commonwealth. The Head of State is the ruling monarch of
The United States is Australia’s largest foreign investment
the United Kingdom, Queen Elizabeth II, who is
destination.
represented in Australia by the Governor General Sir David
Hurley. In practice, power is held by the Prime Minister and
Strategic Outlook
Cabinet, who are elected members of Parliament.
For years, Australia’s geopolitical context has been defined
Parliamentary elections must be held at least once every
by its trade relationship with China and its strategic
three years. The government can choose to call early
relationship with the United States. As tensions mounted
elections. The Liberal-National Party Coalition and the
with China, Australia doubled down on its alliance with the
Labor Party are the two main political forces in Australia.
United States and deepened strategic ties with Japan and
Prime Minister Scott Morrison is leader of the Liberal Party
other nations. Revelations regarding China’s attempts to
and Anthony Albanese is the leader of the opposition Labor
influence Australia’s society and region have had a negative
Party. Morrison, of the Liberal-National Coalition, became
impact on Australian perceptions of China. A 2021 poll
Prime Minister following a Liberal Party leadership ballot
found 63% of Australians believe China is “more of a
in August 2018. He was elected Prime Minister in May
security threat” while 34% felt China was “more of an
2019 with 77 of 151 seats in the House of Representatives.
economic partner.” This is a significant reversal from 2018
Elections are now expected by May 2022.
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Australia
when 82% felt China was “more of an economic partner”
“strengthen the rule-based international order,” language
and 12% felt that China was “more of a security threat.”
that many observers interpreted as a reference to shared
concerns about China’s growing influence and aggression
Australia has undertaken a number of measures to counter
in the region. The Joint Statement welcomed enhanced
China’s growing influence. In 2018, the Australian
trilateral security partnership through AUKUS and
parliament passed new laws on espionage, foreign
discussed AUKUS and Australia’s acquisition of nuclear
interference, and foreign influence, and the government of
powered submarines, enhanced force posture cooperation,
former Prime Minister Malcolm Turnbull blocked Huawei
and alliance integration among other issues.
from participating in the country’s development of its 5G
mobile network. Prime Minister Morrison signaled a key
Japan and the Reciprocal Access Agreement (RAA).
change in Australia’s defense posture with the 2020
Australia has done much in recent years to develop its
Defence Strategic Update. Australian defense spending
strategic relationship with Japan. Australia and Japan
increased 6.1% in 2021 to reach AD$44.6 billion, which put
signed a Joint Declaration on Security Cooperation (JDSC)
defense spending at 2.1% of GDP. Recent Australian
in 2007 and a Japan-Australia Economic Partnership
governments have responded to Chinese influence efforts in
Agreement in 2015. The JDSC established a regular 2+2
the Pacific region with its Pacific Step Up policy and a
meeting of foreign and defense ministers. Australia and
renewed diplomatic focus on the South Pacific.
Japan also signed a Reciprocal Access Agreement in
January 2022 that is intended to “facilitate implementation
Strategic Ties with the U.S. and Other Partners
of cooperative activities between the defence forces of the
Australia has been a U.S. treaty ally since the signing of the
two countries and further promote bilateral security and
Australia-New Zealand-United States (ANZUS) Treaty in
defense cooperation [and] pave the way for an enhanced
1951. Australia sent troops to support the allied cause in the
contribution by Japan and Australia to the peace and
First and Second World Wars, and in the conflicts in Korea,
stability of the Indo-Pacific region.”
Vietnam, Iraq, and Afghanistan. Former Prime Minister
Howard invoked the ANZUS treaty to come to the
The Quad. Australia has also been developing its s trategic
assistance of the United States after the terrorist attacks of
relations with like-minded democracies through the
September 11, 2001. Australia is also a close U.S.
Quadrilateral Security Dialogue. The first-ever in-person
intelligence partner through the “Five Eyes” group of
Leader’s Summit of the Quad was held in Washington, DC,
nations, which also includes Canada, New Zealand, and the
in September 2021. President Biden, Prime Minister
United Kingdom. U.S. Marines have been conducting
Morrison, Prime Minister Narendra Modi of India, and
regular rotational deployments in northern Australia since
Prime Minister Yoshihide Suga of Japan focused on
2012. The ongoing strength of the defense relationship is
COVID-19 and global health, infrastructure initiatives in
also demonstrated through various bilateral and multilateral
the region, the climate crisis, people-to-people exchanges
military exercises such as the Talisman Sabre, RIMPAC,
and education, critical and emerging technologies,
and Malabar exercises. When asked in 2021 “How
cybersecurity, and space. The leaders recommitted to
important is our alliance relationship with the United States
“promoting the free, open, rules-based order, rooted in
for Australia’s security?” 78% of Australians polled
international law and undaunted by coercion, to bolster
responded that it was very important or fairly important.
security and prosperity in the Indo-Pacific and beyond.”
AUKUS. In September 2021, the White House announced a
Climate Change
new AUKUS trilateral security partnership. Some observers
One area of apparent policy difference between the United
described the AUKUS security pact as the most significant
States and Australia is in the approach to climate change.
security arrangement among the three nations in a
Australia has committed to reducing greenhouse gas
generation. The pact focuses mostly on developing military
emissions by 26%-28% below 2005 levels by 2030. The
capability, and opens the way for Australia to build nuclear-
United States has set a target of 50%-52% reductions over
powered submarines. Australia reportedly plans to build
2005 levels in 2030. The Morrison government reportedly
approximately eight nuclear-powered submarines.
resisted pressure to set more ambitious targets in the lead-
Currently there are six nations that operate nuclear powered
up to the United Nations Climate Change Conference
submarines. The United Kingdom, and now Australia, are
(COP26) in Glasgow, Scotland, in October and November
the only nations with which the United States shares
2021. In October 2021, Australia pledged to reach net zero
nuclear propulsion technology. The agreement will also
by 2050. Critics are disappointed the Morrison government
reportedly facilitate further trilateral cooperation to enhance
did not cut Australia’s 2030 emissions target. Projections
joint capabilities and interoperability. The pact is viewed as
indicate Australia will likely experience increasing
a significant collaboration on capability development.
temperatures, increasing frequency of floods, coral
bleaching, ocean acidification, droughts, and bushfires as a
AUSMIN 2021. The Australia-U.S. Ministerial (AUSMIN)
consequence of climate change. Australia has one of the
consultations remain central to the bilateral relationship.
world’s highest levels of greenhouse gas emissions on a per
U.S. Secretary of State Antony Blinken and Secretary of
capita basis and is also the world’s third-largest exporter of
Defense Lloyd Austin hosted their Australian counterparts,
fossil fuels.
Foreign Affairs Minister Marise Payne and Defense
Minister Peter Dutton, in September 2021, for AUSMIN
Bruce Vaughn, Specialist in Asian Affairs
consultations at the Department of State. Their Joint
Statement emphasized “shared values” and the need to
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Australia


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https://crsreports.congress.gov | IF10491 · VERSION 8 · UPDATED

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