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agreement between
the two countries, tariffs and quantitative restrictions remained
on imports into Japan of many of Australia’s key agricultural
commodities.
    Jake had been working with several
Australian companies in the services industries such as education,
tourism, health, finance and legal, and had often come up against
government controls and other impediments to breaking into the
Japanese market. Japan had similar concerns for its high technology
industries operating in Australia including some intellectual
property issues so both countries were looking for mechanisms to
safeguard these growing areas of trade.
    Japan had tabled a request for the removal
of all tariffs on motor vehicles and auto parts entering Australia
from Japan. While the tariffs were small, only 5% of the value of
imports, Australia had refused this request in the past because of
competition from cheap imports which threatened the survival of its
car components industry. The Australian Government had also made
clear its dissatisfaction with the decision by the giant Toyota
Motor Corporation to close its vehicle manufacturing plants in
Australia by 2017, despite being the recipient of large subsidies
over many years from the Australian Government. In the wake of
other plant closures in Australia by foreign car producers, this
decision signified the complete demise of car production in
Australia.
    Japan had made strong representations over
Australian foreign investment laws and was seeking the removal of
restrictions on its present and future investments in Australia. In
particular it wanted to be able to increase its investment in
mining operations in Australia beyond the current government
imposed limitation on foreign ownership of below 50%. This was a
particular sore point for the Japanese in sourcing uranium from the
new plant at Jabiru as they wanted to have long term security of
supplies for their nuclear reactors. Japan also wanted to set up a
mechanism to settle disputes on its vast investments in
Australia.
    Defence cooperation had been ongoing between
the two countries for many years but had increased in importance
with the expanding presence of China in the Asia Pacific region.
China’s threatening advances over disputed ownership of several
island groups in the East China Sea had made Japan’s government
hierarchy increasingly nervous about Chinese ambitions.
Consequently Japan had entered into a defence and security
agreement with the USA and was anxious to enter into a similar
arrangement with Australia as a significant player in the Asia
Pacific region. The meetings were expected to draw together and
strengthen a number of defence and security arrangements between
the two countries, both informal and formal, and combine them into
one treaty.
    Japan was also very keen to secure the
contract to supply Australia with twelve submarines it required to
replace its outdated fleet. Each submarine would cost about $2
billion to build and the Australian defence ministry was about to
make a decision on the bids it had received. The short list was
down to bids from Japan, Sweden, Germany and the Australian
Shipyard Corporation. The decision had to be approved by the
Australian Cabinet which was divided between those members
favouring the cheapest supplier with the best technological
capability (Japan) and the Australian bidder which would provide
the maximum Australian content in manufacturing and technology.
    Jake walked into the meeting a few minutes
to five, noting that all the Australian officials were already
there. Despite the tropical setting he was the only one of the men
not dressed in collar and tie. He shook hands with the Chair of the
meeting, Jenny Antrim, the Deputy Secretary of DFAT, who he had met
before and liked, nodded to Ambassador Robert Connell, helped
himself to a coffee and a biscuit and sat down for the meeting.
Antrim made the introductions before outlining the arrangements for
the officials’ talks and the