Updated June 2, 2022
Australia
Overview
Figure 1. Australia in Brief
Australia 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. This includes the announcement of the
Australia, United Kingdom, United States (AUKUS)
agreement, which will provide Australia with nuclear
propulsion technology for its next generation submarines,
and provides for the three countries to jointly develop
advanced military technology and other capabilities.
Australia’s ties with the United States, Japan, and India
have been boosted through the developing Quadrilateral
Security Dialogue, known as the “Quad.” In addition,
Australia signed a reciprocal access agreement with Japan
in January 2022 designed to facilitate closer defense
cooperation between the two nations.
Background
Economics and Trade
Australia was first inhabited between 40,000 and 60,000
Australia’s economy is projected to rebound after setbacks
years ago. The Aboriginal population were hunter-gatherers
due to the Coronavirus Disease 2019 (COVID-19)
with a complex spiritual culture focusing on creation myths,
pandemic. Australian exports include raw materials, energy,
rituals, laws, and connections to ancestors and the
agriculture, tourism, and education, with Australia among
Australian landscape. Captain James Cook claimed
the world’s top three exporters of resources and energy.
Australia for Britain in 1770, and in 1788 the first European
China is Australia’s largest two-way trade partner and
settlement, largely made up of British convicts, was
accounts for approximately one-third of Australia’s trade
established. Australia evolved into a pastoral settler society
with the world. Although the Australia-China Free Trade
based on sheep, wool, and minerals. Despite the centrality
Agreement came into force in 2015, China has restricted
of the “bush” or the “outback” to the national myth,
some imports from Australia. Despite this, Australian
Australia more recently has evolved into an urbanized
exports to China increased significantly in 2021. The
society. While geographically situated in the Indo-Pacific
Australia-United States Free Trade Agreement (AUSFTA)
region, Australia continues to have deep cultural ties to
came into force in 2005. In 2020, the U.S. goods trade
Britain, the United States, and Europe.
surplus with Australia totaled $9 billion and the U.S.
services trade surplus with Australia totaled $9.3 billion. In
Political Setting
2019-2020, the United States was Australia’s second largest
Australia is an independent nation within the British
two-way trade partner in goods and services, and the United
Commonwealth. The Head of State is the ruling monarch of
States was the largest investor in Australia. The United
the United Kingdom, Queen Elizabeth II, who is
States is Australia’s largest foreign investment 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 in
elections. The Liberal-National Party Coalition and the
its relationship with China in recent years, Australia
Labor Party are the two main political forces in Australia.
doubled down on its alliance with the United States and
On May 21, Labor Party Leader Anthony Albanese
deepened strategic ties with Japan and other nations.
defeated Scott Morrison of the Liberal Party to become
Revelations regarding China’s attempts to influence
Prime Minister of Australia. Labor won 77 of 151 seats in
Australia’s society and the broader region have had a
parliament as compared with the Coalition’s 58 seats.
negative impact on Australian perceptions of China. A 2021
Observers viewed voter desire for action on climate change
poll found 63% of Australians believe China is “more of a
as a decisive issue in the election, which also saw gains for
security threat” while 34% felt China was “more of an
the Green Party and “Teal” independent candidates.
economic partner.” This is a significant reversal from 2018
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Australia
when 82% felt China was “more of an economic partner”
that many observers interpreted as a reference to shared
and 12% felt that China was “more of a security threat.”
concerns about China’s growing influence and aggression
in the Indo-Pacific. The Joint Statement welcomed
Australia has undertaken a number of measures to counter
enhanced trilateral security partnership through AUKUS
China’s growing influence. In 2018, the Australian
and discussed AUKUS and Australia’s acquisition of
parliament passed new laws on espionage, foreign
nuclear powered submarines, enhanced force posture
interference, and foreign influence, and the government of
cooperation, and alliance integration among other issues.
former Prime Minister Malcolm Turnbull blocked Huawei
from participating in the country’s development of its 5G
Japan and the Reciprocal Access Agreement (RAA).
mobile network. Former Prime Minister Morrison signaled
Australia has done much in recent years to develop its
a key change in Australia’s defense posture with the 2020
strategic relationship with Japan. Australia and Japan
Defence Strategic Update. Australian defense spending
signed a Joint Declaration on Security Cooperation (JDSC)
increased 6.1% in 2021 to reach AD$44.6 billion, which put
in 2007 and a Japan-Australia Economic Partnership
defense spending at 2.1% of GDP. Recent Australian
Agreement in 2015. The JDSC established a regular 2+2
governments have also responded to China’s outreach to the
meeting of foreign and defense ministers. Australia and
Pacific with renewed diplomatic engagement of their own.
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 strategic
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, former 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
former 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
The election of Prime Minister Albanese will likely move
described the AUKUS security pact as the most significant
Australia closer to the Biden Administration on climate
security arrangement among the three nations in a
policy. His Labor party campaigned on a pledge to reduce
generation. The pact focuses mostly on developing military
carbon emissions by 43% below 2005 levels by 2030 with a
capability, and opens the way for Australia to build nuclear-
goal of net zero by 2050. Australia previously had
powered submarines. Australia reportedly plans to build
committed to reducing greenhouse gas emissions by 26%-
approximately eight nuclear-powered submarines. Six
28% below 2005 levels by 2030, and the Morrison
nations currently operate nuclear-powered submarines. The
government had resisted pressure to set more ambitious
United Kingdom, and now Australia, are the only nations
targets. (The United States has set a target of 50%-52%
with which the United States shares nuclear propulsion
reductions over 2005 levels in 2030.) The Green Party’s
technology. The agreement will also reportedly facilitate
strong electoral showing may give it a significant role in the
further trilateral cooperation to enhance joint capabilities
Senate, where seats are proportionally allocated, and
and interoperability. The pact is viewed as a significant
important influence over climate-change legislation.
collaboration on capability development.
Projections indicate Australia will continue to experience
rising temperatures, more frequent floods, coral bleaching,
AUSMIN 2021. The Australia-U.S. Ministerial (AUSMIN)
ocean acidification, droughts, and bushfires as a
consultations remain central to the bilateral relationship.
consequence of climate change. Australia has one of the
U.S. Secretary of State Antony Blinken and Secretary of
world’s highest levels of greenhouse gas emissions on a per
Defense Lloyd Austin hosted their Australian counterparts,
capita basis and is also the world’s third-largest exporter of
former Foreign Affairs Minister Marise Payne and former
fossil fuels.
Defense Minister Peter Dutton, in September 2021, for
AUSMIN consultations at the Department of State. Their
Bruce Vaughn, Specialist in Asian Affairs
Joint Statement emphasized “shared values” and the need to
“strengthen the rule-based international order,” language
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Australia
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https://crsreports.congress.gov | IF10491 · VERSION 9 · UPDATED