Please explain: Japanese Prime Minister Shinzo Abe is not pleased by the Australian decision to award the $50 billion ...

Please explain: Japanese Prime Minister Shinzo Abe is not pleased by the Australian decision to award the $50 billion submarine contract to France Photo: Shizuo Kambayashi

That the Japanese are not at all pleased over losing the $50 billion contract for Australia’s new submarine fleet is a given.

Their Prime Minister Shinzo Abe took a personal interest in the whole process. Upon its result this week his Defence Minister Gen Nakatani issued a “please explain” to Australia, describing the decision to award the tender to France as “deeply regrettable”.

This regret stems largely from handshakes, winks and nods in both 2013 and 2014 between Abe and Australia’s then prime minister Tony Abbott.

Stealthy winner: French submarine Shortfin Barracuda, designed by the DCNS group.

Stealthy winner: French submarine Shortfin Barracuda, designed by the DCNS group. Photo: Supplied

The Japanese believed there was an understanding that Australia’s new submarines would be built by them.

In Japan, as in most Asian nations, verbal commitments have impact.

Some would describe that as a naivety, but a lack of understanding of such nuances is currently causing Asia watchers to suggest Australia is not being totally “honourable” in its own region.

Prime Minister Malcolm Turnbull after announcing the winning bid for for the new submarine DCNS in Adelaide.

Prime Minister Malcolm Turnbull after announcing the winning bid for for the new submarine DCNS in Adelaide.

The Australian government has also just awarded a defence supply ships deal to Spanish company Navantia, with the contract expected to be signed soon.

This has outraged the South Korean government because, just as with Japan and the submarines deal, the Koreans thought they were the frontrunners after Abbott had pushed for their involvement.

A spokesman for the Korean embassy in Canberra diplomatically expressed concern over the Spanish being named the preferred partners.

“We are very much disappointed given the high quality and good prices of the Korean ships and Korea’s track record of co-operating with foreign countries,” he said.

But another Korean source put it more bluntly, saying the free trade agreement reached between Korean and Australia, which entered into force in December 2014, was meant to expedite those defence procurement contracts that were already in train.

“Korea feels harshly done by and it is now a matter of maintaining face,” the contact said

A spokesman for Defence Minister Marise Payne said the minister was not involved in that assessment process, but all was conducted with integrity. 

Yet South Korean communities in Australia are mobilising, expressing their displeasure through direct petition to Prime Minister Malcolm Turnbull.

They are calling for a review of the process and outcome.

Singapore’s ST Marine design has not been shortlisted for a competitive bid analysis for an offshore patrol vessels project, leading one high-level contact from that nation to describe the snub as “rudeness in the extreme”.

Abbott supporters inside the government are grumbling at Turnbull ignoring his predecessor’s nod to the Japanese over the subs, as well as to the Koreans over the supply ships.

“I just hope we are not using national security for one-upmanship,” one Coalition MP said.

Australian National University’s Dr Andrew Carr, of the Strategic and Defence Studies Centre, believes that while the degree to which defence contracts “lock in” relationships can be overstated, Australia potentially has a growing problem in the region.

“The Japanese have a right to be disappointed over the subs because to them they did have some sort of promise,” he said.

“There is realism there though and the wider relationship will remain intact, but with these examples in the region Australia needs to pay more attention to the issue of trust.

“Our reputation as a reliable trade partner could be hurt and this could potentially flow on to other areas besides defence contracts.”

Watching all this from the sidelines is Taiwan, Australia’s seventh largest customer for exports – mostly in the fields of energy and minerals.

Although Australia and Taiwan do not have official diplomatic relations, there are strong trade and cultural ties.

Taiwan wants a free trade agreement with Australia and consistently posts its most senior trade gurus to its “embassy” in Canberra.

The most recent, Dr David Lee, has just been invited back to Taipei to take up a new role as Taiwan’s Foreign Minister in the new government, following elections early this year.

A highly skilled diplomat and trade negotiator (besides Canberra, he has been ambassador to Washington, Ottawa and the European Union), Dr Lee sees a free trade agreement with Australia as a high priority.

He says successive Australian governments had indicated that with a free trade agreement with mainland China completed, talks could progress with Taiwan.

But progress does not appear to be rapid.

“I think it is very much up to Canberra, this decision,” he said while still in his role as representative to Australia.

“Right now among the eight largest export markets, seven out of eight have already had an FTA or are in the process of negotiating an FTA.

“Taiwan is the only one left out. I was told that Canberra is interested to explore the possibility in the near future.”

The ANU’s Dr Carr believes Australia has to stop sending mixed messages and should progress these talks.

“An FTA could be pursued with Taiwan without risking our relationship with China,” he said.

“We can separate the economic from the diplomatic and this would be another way of Australia showing more good faith in our own neighbourhood.”