Trading with the world
As a modern trading nation, Australia is a diversified and reliable supplier of high quality goods and services to over 200 countries and a sophisticated import market for products from all over the world.
Australia’s sea and air ports are dynamic and efficient. The ports of Sydney and Melbourne on the east coast of Australia are the major trading centres for manufactured goods. Coal, iron ore and an array of other natural resources and commodities such as Liquefied Natural Gas (LNG), various minerals and wheat are also shipped from major facilities around the nation’s extensive coast line.
Australia has a long history of trading with the world.
One of the earliest exports was wool, from which the expression ‘Australia riding on the sheep’s back’ was born. Today, a more diverse export industry has grown incorporating manufacturing products, services such as education and tourism, and high quality food and wine
In 2007, Australia’s largest export markets were Japan, China, the United States, Republic of Korea and New Zealand.
Australia is a strong advocate of trade liberalisation, and consistently supports trade liberalisation in the World Trade Organisation (WTO). In 1948, Australia was one of the inaugural 23 signatories to the General Agreement on Tariffs and Trade (GATT) – the precursor to the WTO - and has played an active role in global trade talks.
One of Australia’s initiatives was bringing together the Cairns Group, a coalition of 19 agricultural exporting nations which has become an influential voice for the liberalisation of agricultural trade. It met for the first time in the Far North Queensland city of Cairns in 1986.
Australia has also played an activist role in forming regional trade and economic groupings, such as the Asia-Pacific Economic Cooperation (APEC) which was launched in Canberra in 1989. It has since become the premier forum for economic growth, cooperation, trade and investment in the Asia-Pacific region – the fastest growing economic region of the world.
Trade has always been a vital component in Australia’s economic prosperity. The hallmarks of its trading success have been strong infrastructure and stable institutions; a flexible and skilled workforce; and a rich resource and agricultural base.
In 2006, Australia was the world’s largest exporter of coal, wool, zinc and tin ores and concentrates, iron ore, beef, barley and raw sugar (2006 UN Comtrade Database).
Composition of trade
Australia’s two-way trade in goods and services was valued at $454 billion in 2007. Major export sectors are minerals and fuels, services, manufactured goods and rural products.
Australia’s exports of goods and services grew by 3.8 per cent to $218 billion in 2007, about 20 per cent of Gross Domestic Product (GDP). On average, Australia’s exports have grown by 8.7 per cent per annum over the past five years.
Australia’s largest trading partners in 2006-07 were China, Japan, the United States, United Kingdom and Singapore.
Supplier of advanced manufactures
While Australia’s largest export sector is minerals and fuels, manufacturing is also a major part of the economy. Advanced manufactured items (also known as ‘elaborately transformed manufactures’ or ETMs) accounted for around 60% of Australia’s total manufactured exports. Many of the companies producing these goods are integrated into global supply chains, one of the key manufacturing trends of the new millennium.
Over the past decade, Australia’s exports of ETMs, with high levels of value added, have grown at an average annual rate of 3.2 per cent. Export successes include passenger motor vehicles to the United States, Middle East, Southeast Asia and South Africa, and full engine kits to the Republic of Korea. Australia has also developed a competitive edge in high technology exports, such as medical and scientific equipment.
(a) Goods trade are on a recorded trade basis, services trade are on a balance of payments basis
(b) Includes education-related travel and other educational services.
(c) Includes related agency fees and commissions.
(d) Other transportation services covers a range of services provided in Australian aiports and ports, including cargo and baggage handling services, agents fees associated with passenger and freight transportation and airport and port charges.
Source: DFAT STARS database & ABS. Cat. No 5368.0
The Australian Trade Commission (Austrade) is the Australian Government’s international trade promotion and facilitation agency. Austrade assists international buyers of goods and services to develop trade connections with Australia and assists Australian businesses to increase their exports. Austrade also helps companies to reduce the time, cost and risk involved in doing business internationally. Austrade is represented in Australia and in more than 140 overseas locations in over 60 countries.
The Export Finance and Insurance Corporation (EFIC) is a specialised financial services organisation supporting Australian businesses exporting and investing overseas by providing finance, finance guarantees, and insurance and bonding facilities. As an export credit agency, EFIC operates beyond the limits of the commercial market. It provides support when financial, political or industry risks exceed the capacity available in financial markets.
Foreign Investment
Australia welcomes foreign investment. It recognises the important role foreign investment plays in boosting economic growth, developing competitive industries, creating jobs and increasing exports. The stock of foreign investment in Australia at 31 December 2007 totalled $1.6 trillion.
Similarly, investment offshore is vital to the development of regional and international marketing strategies of Australian firms and enables access to global business networks. The stock of Australian investment abroad was worth $884 billion.
Over the decade to 2006, Australia was the 5th largest net recipient of FDI in the OECD (OECD 2007).