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  • Buu Nguyen

A Comprehensive Strategic Partnership upgrade: Unpacking what it means for the Australia-Vietnam relationship

As part of Canberra's renewed focus on Southeast Asia, an upgrade to the Australia-Vietnam relationship to a Comprehensive Strategic Partnership signals a new chapter in the interactions between the two countries, and is certainly in both their interests, but can more be done?


Photo credits: VnExpress/Giang Huy

In March  2024, Australia and Vietnam significantly upgraded their relationship to a Comprehensive Strategic Partnership (CSP), following the 50th ASEAN-Australia Special Summit. This has elevated their cooperation in defence, security, trade, and education, subsequently opening doors to new initiatives.


Despite a complex past marked by Australia’s involvement in the Vietnam War (1962 – 1972), the two countries established diplomatic relations in February 1973 and have steadily strengthened their ties. This culminated in the establishment of a Comprehensive Partnership in 2009, during the visit of the General Secretary of the Communist Party of Vietnam Nong Duc Manh to Australia.


One crucial area of cooperation in the Australia-Vietnam relationship is aid and development. For decades, Australia has been a leading provider of Official Development Assistance (ODA) to Vietnam. This support has spanned diverse fields, from education and structural construction to infrastructure development and the promotion of agricultural and rural development. Australia's many practical projects and initiatives have significantly contributed to Vietnam's sustainable development. These projects, along with numerous Australian-funded bridges,  serve as good indicators the close and practical relationship between the two nations. The CSP has already forged additional pathways for enhanced cooperation in this sphere.


Along with aid, trade and economics form another crucial pillar of this bilateral relationship. Vietnam and Australia are important trading partners, ranking each other's 10th largest trading partners in 2023. Furthermore, Australia is a growing foreign investor in Vietnam, holding the position of the 20th largest foreign direct investor (FDI) in Vietnam as of January 2024.


Indeed, Vietnam-Australia trade has boomed, growing at an impressive 8.6% annually over the past 20 years. This outpaces both Australia's overall trade growth (5.8%) and its trade with ASEAN (5.5%). By 2023, two-way trade between the nations reached almost US$14 billion, reflecting their growing importance as trading partners. Moreover, January 2024 saw a surge in trade between Vietnam and Australia, reaching US$1.25 billion. This marks a significant jump from US$872 million in January 2023.


This prospering economic relationship is also evident in the growing investment flows between Vietnam and Australia. By the end of 2023, Vietnam had invested over US$552 million in 92 projects across Australia. Conversely, Australian businesses have a significant presence in Vietnam, with 631 valid projects and a total registered capital exceeding US$2 billion. A case in point is the international engagement strategy 2022 to 2026 of Australia’s Northern Territory Government, which places Vietnam in the top six priority countries for trade and investment cooperation. This economic relationship further stands to flourish and deepen with the upgrading of bilateral ties between the two countries.


Beyond economic ties, the CSP also strengthens Vietnam-Australia defence cooperation in industry collaboration, maritime security, intelligence sharing, and cyber defence. This aligns perfectly with Vietnam's recent military modernisation efforts, which previously leaned heavily towards Russia. It is vital to note that defence cooperation between the two countries already has strong foundation as Australia and Vietnam have both worked closely in UN Peacekeeping Missions.


 The A$4.15 million Vietnam-Australia Defence Cooperation Program (2023-24) focuses on strategic dialogue, peacekeeping (including Women, Peace and Security cooperation and support for Vietnam's UN mission in South Sudan), training (including English language), maritime security (with annual ship visits), and Air Force and Army engagement.


Defence cooperation with Australia, particularly as it gains experience through the AUKUS alliance, can be highly valuable in this regard. This reinforces the vision stated by Australian Foreign Minister Penny Wong on the ASEAN-Australia Special Summit 2024 that “Australia is transparently investing in a capable military, defence industry and partnerships to continue to be a reliable security partner for the region. Our longstanding defence partnerships in the region, including with ASEAN member states, build not only interoperability but friendships and understanding. Together, we show the high costs for anyone seeking to provoke conflict”.


Despite evident success in cooperation in these areas, challenges in the relationship do exist. Human rights issues and labour standards are a case in point. Events such as President Vo Van Thuong's request during Governor-General David Hurley's April 2023 visit to Vietnam to “control and handle terrorist individuals and organisations that may use its territory to conduct sabotage activities against Viet Nam” have raised concerns among some Vietnamese Australians. These concerns stem from a belief that the request targets their community, who consistently speak out for human rights violations in Vietnam. This concern- amplified by the statement issued by Human Rights Watch (HRW) on the same day and urging similar action on human rights from Vietnamese leadership- highlighted the need for Governor-General Hurley to call on the Vietnamese government to release all political prisoners, who were sentenced solely for peacefully exercising their basic rights.


The Vietnamese community in Australia is vibrant with over 350,000 and this community plays a crucial role in promoting people-to-people exchanges, fostering cultural understanding, and contributing significantly to Australia's cultural diversity with Vietnamese ranking as the fourth most common language. However, the Vietnamese community in Australia also includes political dissidents and their unease at such requests by the Vietnamese government was evident in the aftermath of President Vo Van’s visit.


Despite these challenges, the upgradation of bilateral ties to the CSP level indicates why both Australia and Vietnam intend to deepen their relationship. Both Australia and Vietnam have China as their largest trading partner. Australia has been on the receiving end of China’s economic coercion in the aftermath of Australia’s demand for an independent inquiry into the origins of the Covid-19 pandemic. Since 2021, Australia has been attempting to diversify its trading partners in order to safeguard its economic security. Australia’s quest for economic security is also echoed by Vietnam’s own efforts to reduce its trading reliance on China.


China is also the dominant trading partner of Vietnam. However, Vietnam is increasingly prioritising diversifying its economy and reducing its dependence on China. Vietnam is also positioning itself as a leading manufacturing hub in the region by attracting investment from China through initiatives like ‘China +1’. Vietnam and China also have contesting claims in the South China Sea and in recent years, Vietnam has forged closer defence partnerships with other countries in the region to in an effort to balance China.  


The geopolitical architecture in the Indo-Pacific is in a state of flux, with an assertive China increasingly challenging the US-led rules based international order. Consequently, middle powers in the region are trying to exercise their own agency at this time of great power rivalry. While Australia seeks to exercise its agency through defence initiatives like AUKUS and its position as a key actor in the Pacific, Vietnam is seeking to increase its economic footprint, while also seeking to address the challenges posed by a more assertive China. An upgradation of ties to the CSP level gives both countries the opportunity to forge closer relations in these complimentary areas and exercise their agency as middle powers in the Indo-Pacific.


DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of IIPA and this platform.

 
Author

Buu Nguyen is a graduate from the University of Maine at Presque Isle, US and is currently pursuing a Master of Arts at the Nan Tien Institute, Australia. He has written extensively on the international relations of East and Southeast Asia, with a focus on Vietnam and the shared prosperity of the small states in the Indo-Pacific region.

 

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