THE AUSTRALIA -UNITED STATES PARTNERSHIP A Report from The Alliance 21 Project United States Studies Centre at the University of Sydney 2 Steering Committee Dr Lachlan Strahan (Chair), Department of the Prime Minister and Cabinet Professor Geoffrey Garrett, The Wharton School, University of Pennsylvania Professor Bates Gill, United States Studies Centre, University of Sydney Ms Melissa Grah-McIntosh, United States Studies Centre, University of Sydney Mr Tom Harley, The Dow Chemical Company The Hon Robert Hill AC, United States Studies Centre, University of Sydney Mr Angus Kirkwood, Department of Defence Mr David Wawn, Chevron Australia Previous Steering Committee Members Mr Peter Jennings PSM, Australian Strategic Policy Institute Dr Margot McCarthy, Department of the Prime Minister and Cabinet Mr Allan McKinnon, Department of Immigration and Border Protection Ms Rachel Nobel PSM, Department of Immigration and Border Protection Mr Brendan Sargeant, Department of Defence Directors The Hon Robert Hill AC Professor Geoffrey Garrett Theme Leaders Professor Howard Bamsey (Energy Security) Professor John Daley (Education and Innovation) The Hon Robert Hill AC (Natural Resources and the Environment) Professor Andrew MacIntyre (Emerging Asia) Mr Andrew Stoler (Trade and Investment) Professor Russell Trood (Defence and Security) Mr Tony Wood (Energy Security) Supporting partners 3 ALLIANCE 21 The Alliance 21 project is a multiyear research and public outreach initiative to examine the contemporary relationship between Australia and the United States through the prism of the two countries’ many areas of common interest, including trade and investment, defence and security, education and innovation, energy security, natural resources and the environment, and in an emerging Asia. Based at the United States Studies Centre at the University of Sydney, Alliance 21 is directed by the Hon Robert Hill AC and Professor Geoffrey Garrett, and is generously supported by the Australian Government and eight corporate partners: Dow, Chevron, ConocoPhillips, GE, News Corp, Visy, Raytheon and Morgan Stanley. To date, through the work of more than two dozen conferences, forums, workshops, lectures and roundtables, numerous commissioned research papers, and the expert contributions of hundreds of leaders on both sides of the Pacific from government, business, and academia, Alliance 21 has highlighted the broad array of mutual interests that underpin and sustain the Australia–US relationship now and in the future. The program has generated new networks of collaboration and understanding between Australia and the United States and developed a wealth of findings and recommendations to help the allies address the challenges and opportunities which lie ahead for this valuable partnership. Find out more: http://www.alliance21.org.au UNITED STATES STUDIES CENTRE Established in 2006, the United States Studies Centre at the University of Sydney aims to improve understanding of the United States and to become one of the world’s leading American studies centres. Spanning the study of politics and policy, economics and business, culture and society, we fulfill this mission through education, research, public outreach and policy initiatives. Working with partners in Australia, the United States and in Asia, the Centre has grown rapidly and today educates more than a thousand students annually. It provides unique opportunities for young Australians to work and study in the US and Asia, and cooperates with its sister institution, the Perth USAsia Centre at the University of Western Australia, across a range of programs. The USSC innovative policy development and thought leadership initiatives, such as Alliance 21, bring leading Americans and Australians together to collaborate in addressing common challenges. Find out more: http://ussc.edu.au/ 4 Acknowledgements This report marks the culmination of an ambitious and highly active three-year effort and the contributions of hundreds of individuals involved in the Alliance 21 project. This report also represents a beginning as Alliance 21 looks to continue its work in the years ahead to deepen the networks, build on the findings, and support the recommendations generated in its first phase. This has only been possible with generous support and expert inputs from a broad network of key stakeholders, thought leaders, and professional staff. In particular, we wish to thank our principal supporter, the Australian Government, and eight corporate supporters: Dow, Chevron, ConocoPhillips, GE, News Corp, Visy, Raytheon and Morgan Stanley. These supporters have not only been financially generous, but their officials and experts have given generously of their time and insights as well. We are extremely grateful to Alliance 21 Co-Directors the Hon. Robert Hill AC and Professor Geoffrey Garrett who, in leading this project, provided it strategic guidance, international profile, and a wealth of knowledge. We also wish to thank the Alliance 21 theme leaders— Professor Howard Bamsey, Professor John Daley, Professor Andrew MacIntyre, Mr Andrew Stoler, Professor Russell Trood, and Mr Tony Wood—for their stewardship of the project’s intellectual and policy-related content that is at the heart of Alliance 21, as well as the dozens of expert contributors on both sides of the Pacific who took part in the conferences, workshops, seminars, and public events under the Alliance 21 banner. Finally, we extend our thanks to all the remarkable women and men on the staff of the United States Studies Centre (USSC) whose hard work and professional expertise contribute so much to the success of Alliance 21. We would especially like to express our appreciation to Melissa Grah-McIntosh, USSC Director of Events and Project Management, and Alliance 21 Administrator. Drawing insights from the enormous amount of work carried out under Alliance 21—much of which is captured in this report—we anticipate strong forward momentum and continued collaboration with all of our Alliance 21 partners to advance our understanding of Australia–US relations. With our thanks, we look forward to working with you in the years ahead. Malcolm Binks AO Bates Gill Chairman of the Board CEO and Professor of Politics United States Studies Centre United States Studies Centre University of Sydney University of Sydney 5 TABLE OF CONTENTS Executive Summary 6 Part I: A relationship of common interests 11 • Strategic guideposts 13 • The way ahead for a 21st century partnership 15 Part II: A comprehensive partnership • Trade, investment, competitiveness, and innovation 16 • Defence and security 21 • Energy security, natural resources, and the environment 26 Part III: Looking ahead: Conclusions and recommendations • Improving public awareness and support 31 • Trade, investment, competitiveness and innovation 34 • Defence and security 36 • Energy security, natural resources and the environment 41 • Concluding words 45 Appendix: Alliance 21 Contributors and Events, 2012-2014 46 “The Alliance 21 project is conceiving of new ways that our alliance can build on our shared history to identify the challenges and opportunities that are ahead and to devise joint strategies to create our shared future.” THE HON JULIE BISHOP MP AUSTRALIAN MINISTER FOR FOREIGN AFFAIRS 6 EXECUTIVE SUMMARY The Australia–US partnership began as a security pact more than 60 years ago, but today the relationship between the two countries is underpinned and sustained by a much broader and deeper set of common interests. Defence ties remain a core component of engagement, but the connection has grown to encompass substantially more than a military alliance. Grounded in shared norms and interests, strong Australia–US links contribute to a broad-based special relationship that is increasingly global in scope and which has few equals in the world. Understanding and building on these mutual interests will be critically important given the many challenges that lie ahead. To successfully address these challenges, three fundamental points should serve as strategic guideposts for future Australia–US relations. • Future challenges will be more effectively addressed through an even closer partnership with each other. • Australians and Americans should increasingly work together in Asia as the principal region where they can most effectively act on and expand their partnership for mutual benefit. • While a closer partnership will have a defence and security component, the most effective future Australia–US relationship will be far more comprehensive in concept, scope, and action, encompassing even greater engagement across the full spectrum of the relationship. Key findings Trade, investment, competitiveness, and innovation • Extensive and growing economic ties between Australia and the United States, and between the two coun- tries and the broader Asian region, are a vastly under-appreciated pillar of the relationship. The United States is Australia’s most important economic partner, but even keen observers are probably not aware of the centrality of the United States to the Australian economy. • In the nearly 10 years since its commencement, the Australia–United States Free Trade Agreement (AUSFTA) has proven a remarkable success, with two-way trade up 50 per cent and bilateral investment skyrocketing. • Completion and implementation of the Trans-Pacific Partnership (TPP) is of the utmost importance and would be the most meaningful reform of global trade since the creation of the World Trade Organiza- tion. The TPP is at least as