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The stellar rise of the education export industry in Australian higher education, and the even more spectacular downturn now occurring, mask underlying tensions that have long dogged the industry and prevented it from improving quality or achieving long-term sustainability. The international education programme has been unbalanced by the drive for revenues at any cost. The tensions are (1) between education policy and immigration policy, (2) between commercial export and the health of the domestic education and research system, (3) between neo-imperial economic exploitation of Asia and a more holistic engagement on the basis of equal respect, (4) between international students as consumers and students as people with comprehensive rights, and (5) between the national political economy and the global public good. The article suggests ways to resolve these tensions, including the forms of a bilateral protocol that would provide more coherent and comprehensive rights for international students.

Regional tendencies in higher education are increasingly important, for example the common rise of North-East Asian universities in China, Hong Kong SAR, Taiwan and South Korea, and Singapore in South-East Asia, to a major global role, following the prior trajectory of Japan. Though the rapidly modernizing Post-Confucian countries do not constitute a formal region, they share a common political and cultural dynamism, entailing rapid improvement of quantity and quality in education and research. This poses challenges and opportunities for Australia, a British/European heritage nation located at the edge of Asia, with extensive trade into East Asia, and an Asian-influenced demography, providing that it can (1) further develop its research capacity, given that research provides the main medium of deep collaboration in higher education, and (2) lift its cultural capacity to interface with systems in the region.

Global university rankings have cemented the notion of a world university market arranged in a single "league table" for comparative purposes and have given a powerful impetus to intranational and international competitive pressures in the sector. Both the research rankings by Shanghai Jiao Tong University and the composite rankings by the "Times Higher Education Supplement" have been widely publicised and already appear to have generated incentives in favour of greater system stratification and the concentration of elite researchers. However, global comparisons are possible only in relation to one model of institution, that of the comprehensive research intensive university, and for the most part are tailored to science-strong and English-speaking universities. Neither the Shanghai nor the "Times" rankings provide guidance on the quality of teaching. It is important to secure "clean" rankings, transparent, free of self-interest, and methodologically coherent, that create incentives to broad-based improvement. (Contains 3 tables.)

From 1990 to 2003, Australia's share of the global market in cross-border degrees grew from 1% to 9%. Full fee-paying foreign students now constitute one quarter of enrolments, and education is Australia's third largest services export. Positioned as an Anglo-American system on the edge of Asia, Australia has differentiated itself from the United States and United Kingdom on price, location, safety, and climate, not academic content. The supply side keys to growth are deregulation and prolonged reductions in the public funding of universities. However, the Shanghai Jiao Tong University survey of research performance finds that Australia is less strong in research than cross-border degrees. Australia's policy may have negative implications for its longer-term global standing and limit the range of position-taking strategies available to its universities. These themes are explored in the context of the emerging worldwide market and Australian policy changes that have enhanced institutional stratification. (Contains 3 tables, 1 figure, and 11 notes.)