The rapid growth in exports of manufactures from developing countries has unsettled the performance of manufacturing activities in many developed countries. Asian countries are heavily involved in the export of manufactures. Australia typifies the problems faced by the developed countries. How should Australia respond? Should it attempt to isolate itself from Asia? Or should it attempt to integrate itself with Asia? Is the removal of import restraints a prerequisite for closer integration? Or can closer integration be achieved by alternative approaches which are more politically acceptable? These issues are discussed.