The controversy over Japanese investment in Australia, 1987-1991: Context and lessons

The intense controversy over Japanese investment in Australia in the late 1980s continues to attract academic attention as a significant episode in Australia-Japan relations. This paper addresses two limitations of the existing literature. Firstly, it situates the controversy in the political economy of foreign investment policy liberalisation. This is important to an understanding of to what degree it was fundamentally a Japan-related or a foreign investment-related issue. How it became both provides insights into the dynamics of Australia-Japan relations in that era. Secondly, why the Australian government reaffirmed its commitment to liberal non-discriminatory policy in the face of popular disquiet is examined directly. This complements the existing rich literature on the negative reactions to Japanese investment and may help to provide a fuller picture of the domestic sources of stability in Australia-Japan relations in that period. It also highlights the historical magnitude of the Howard government's recent apparent abrogation of the non-discriminatory principle in foreign investment policy with the Australia-US Free Trade Agreement of February 2004 and the questions so raised about the Australia-Japan bilateral relationship.