The ballooning Asian middle-class will continue to offer massive economic opportunities to Australia, but a freer trade and investment environment across the region is likely to be "a generational endeavour", the foreign policy White Paper states.
The paper repeatedly and in stark terms warns of the rising global dangers of economic protectionism, but says that Asian growth will provide "numerous opportunities for Australia" in Asian demand for minerals and energy, services and premium agricultural products.
"Australia's long-term objective is to work towards a region-wide trade and investment arrangement defined by comprehensive rules to promote liberalisation, reform and a more seamless trading environment. It is likely a generational endeavour," the paper states.
Eventually bringing the US and China into a region-wide deal would "reduce economic tension and help maximise regional economic growth prospects".
The paper notes that the US under Donald Trump's leadership is trying to renegotiate some trade agreements and taking other steps to reduce its trade deficit and address measures it regards as unfair to its companies. Mr Trump pulled the US out of the Trans-Pacific Partnership, a trade deal that would have linked it to 11 countries in the Asia-Pacific region including Australia, though not China.
But Australia would "resist protectionism and push for an open global economy", the paper says.
"Any pronounced shift towards protectionism as a result would impede flows of trade and investment, dampen economic growth and undermine the international rules that govern trade and allow economies to prosper together. It would also reduce living standards, including in Australia."
At the same time Australia will need to harmonise its foreign and trade policy with its domestic economic policies, particularly seizing the opportunities of technology to increase productivity and competitiveness.
Technology and automation could worsen income inequality and intensify the backlash against globalisation. Developments such as artificial intelligence, robotics and biotechnology will radically change the types of jobs that Australians do, and "domestic policy settings will need to respond to the changing nature of work", it warns.
But with the right domestic policies, Australia can take advantage of the fast-moving developments in these areas.
"Lower-cost robotics and technologies such as additive manufacturing are increasing opportunities for companies based in higher-wage economies, including our own," the paper states.
Asia is forecast to deliver nearly two-thirds of global growth through to 2030, by which time its middle-class could number nearly 3.5 billion people. Four of the world's five biggest economies are likely to be in Asia: China, India, Japan and Indonesia.
The government's most immediate free trade deal priority is the Indonesia-Australia Comprehensive Economic Partnership. It will also negotiate an "ambitious" free trade agreement with the European Union and a deal with Britain once it has left the EU.
