Acts of economic statecraft – both positive incentives and negative sanctions – are key foreign policy tools. Countries use tools like development assistance, loans, visas, tariffs and investment as policy levers to achieve their aims. This paper sets out future focused actions for Australia in its practice of economic statecraft, including how it can support its partners in the Indo-Pacific.

Trends in economic statecraft – particularly due to geopolitical competition – are changing the Indo-Pacific region.

The current conception of economic statecraft challenges two traditional separations – between economics and security, and between domestic and international. Perceptions that economic statecraft need be confined to external acts have changed as countries implement domestic polices to strengthen specific industries for geostrategic purposes, such as the recent Future Made in Australia plan.

In this new global paradigm, Australia must treat its deployment of and response to economic statecraft with a sense of urgency. This includes devising structured policy responses to acts of negative economic statecraft and forging a coherent vision when it comes to the practice of positive economic statecraft. These responses must form part of a broader joined-up foreign policy architecture.

The following pathways are discussed in this paper.

• Adopting a vision for Australia’s economic statecraft, encompassing what Australia is seeking to achieve – and avoid – when utilising or responding to economic statecraft.
• Establishing a national coordinating mechanism to engage on issues of economic statecraft.
• Maintaining close relationships with regional partners through acts of positive economic statecraft – especially development assistance – and through assisting partners that are susceptible to acts of economic coercion.
• Promoting and advancing a transparent, predictable and rules-based global trading system.
• Working closely with business, including sharing information, creating certainty and ensuring business is aware of government economic statecraft policies.