Preferential trade agreements as instruments of foreign policy: an Australia-Japan free trade agreement and its implications for the Asia Pacific region

The proliferation of preferential trade agreements (PTAs) in the Asia Pacific region is widely seen as a pragmatic response by governments to the bogging down of the regional and multilateral trade institutions. Analysis of these PTAs has focused primarily on their trade and economic dimensions. There has been less discussion and analysis of the geo-political and strategic dimensions of PTAs in the region. This article explores these issues with reference to the negotiation of a bilateral trade agreement between Australia and Japan. It argues that the drivers for this negotiation are primarily geo-political and strategic rather than economic and commercial, and it explores the potential implications of this. It concludes that the subordination of trade and economic concerns to broader foreign policy objectives in the pursuit of PTAs carries with it considerable risks, not just for Australia and Japan but also for the Asia Pacific region more generally.