Halvorson, Dan, and O. Yul Kwon

Abstract
This article analyzes recent trends in Australia-Korea economic relations and considers their interface with security issues in the Asia-Pacific region. Bilateral merchandise trade has slowed in the last decade due to a decline in economic complementarity. Services trade remains limited with most flowing from Australia to Korea. Bilateral FDI is low and accounts for only a minor proportion of respective total inflows. The Korea-Australia FTA currently under negotiation is expected to reinvigorate and diversify the economic relationship. The article assesses that any security implications for Australia-Korea commercial relations are likely to come from external sources such as the strategic uncertainty surrounding the rise of China, various destabilizing issues emanating from North Korea, Japan’s possible military ‘normalization’ and a range of transnational security issues. The bilateral partnership was strengthened in March 2009 by the launch of the FTA along with a Joint Statement on Enhanced Global and Security Cooperation. Current trends suggest that the bilateral relationship will grow closer in the twenty-first century. As open and constructive middle powers with strong relationships with both Washington and Beijing, Australia and South Korea can play a cooperative role in moderating strategic tensions in the Asia-Pacific region as China continues to increase its power and influence.
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