Travel

Australia Now

Bilateral and Regional Trade Relationships

Australia is pursuing a comprehensive trade agenda to improve international market conditions for its exporters and investors.

The government’s key trade focus remains multilateral trade liberalisation and reform through the current Doha Round of negotiations in the World Trade Organization (WTO). A successful outcome to these negotiations offers the greatest opportunity to increase Australian exporters’ access to overseas markets and improve the competitiveness of Australian exports.

As well as supporting the WTO multilateral trade negotiations, Australia:

Asia–Pacific Economic Cooperation

APEC was established in 1989 and is the region’s leading forum for Asia–Pacific economies to strengthen regional links and pursue common trade and economic goals. APEC operates on the basis of non-binding commitments and open dialogue. It has 21 member economies: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; Republic of the Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; United States; and Vietnam.

In 2006–07, APEC countries accounted for 68 per cent of Australia’s trade in goods and services with the world. In the same year, our two-way trade in goods with APEC members increased by 9 per cent to $249 billion. APEC’s gross domestic product has grown at an average of 6.6 per cent a year since 1989—at a higher rate than the world’s average growth of 6 per cent over the same period.

Australia’s key priority in APEC is to bolster trade and investment by harnessing APEC member support for a successful outcome to the Doha Round of multilateral trade negotiations and by reinforcing APEC’s leading role in promoting regional trade and investment liberalisation and facilitation and economic reform. The Australian Government also aims to advance APEC’s human security agenda, including food security, disaster response and counter-terrorism. The government will also support institutional reform of APEC to ensure that it has the right strategic focus, budget processes and business links to deliver results in the region.

Free trade agreements

Bilateral and regional free trade agreements (FTAs) that are liberalising across all sectors and consistent with Australia’s multilateral objectives are important vehicles for enhancing access to markets and improving business conditions.

Australia has concluded FTAs with New Zealand, Singapore, Thailand and the United States. Negotiations are under way with China, Malaysia, Japan, Chile, the Gulf Cooperation Council and, together with New Zealand, ASEAN (the Association of Southeast Asian Nations). Feasibility studies on FTAs are being undertaken with Indonesia, the Republic of Korea and India. Pacific Island trade ministers have also agreed to consult on a way forward for a free trade area in the Pacific region.

Under WTO rules, FTAs must eliminate tariffs and other trade restrictions on ‘substantially all trade’ in goods between the member countries and have substantial sectoral coverage in services. The Australian Government considers that FTAs should be comprehensive in the scope and scale of their liberalisation in order to maximise their contribution to strengthening the multilateral trade system.

In early 2008, the Australian Government announced a comprehensive review of Australia’s export policies and programs. Research on FTAs will be undertaken as part of the review process, including the development of benchmarks to guide Australia’s approach to future FTA negotiations.

Australia’s free trade agreements

The Australia–New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) was concluded in 1983. It was the successor to a more limited FTA between the two countries that dated back to the 1950s. ANZCERTA is a comprehensive FTA arrangement covering almost all aspects of the bilateral trade and economic relationship between the two countries. It is also a model FTA in many respects, most notably because both countries have simultaneously lowered their most favoured nation tariffs in parallel with the reduction in preferential rates. As well as underpinning bilateral trade in goods and services, ANZCERTA is the umbrella for close collaboration across many issues of trade significance, including quarantine, transport, regulatory and product standards and business law issues. Since ANZCERTA came into effect in 1983, bilateral merchandise trade has increased by more than 600 per cent to $15 billion in 2006–07.

The Australia–United States Free Trade Agreement came into effect in January 2005. The agreement aims to boost Australia’s trade with the world’s largest and most dynamic economy and covers goods, services, investment, government procurement, competition-related matters and other issues. In 2006–07 the United States was our third-largest two-way trading partner and third-largest export market. Two-way goods and services trade grew by 8 per cent to over $48 billion and inward and outward investment grew by 18 per cent to reach $788 billion. Since the FTA came into force, Australian exporters have secured over $110 million worth of US government procurement-related contracts.

The Thailand–Australia Free Trade Agreement, which also entered into force in January 2005, established new opportunities for Australia to work towards greater economic integration with the second-largest economy in South-East Asia. More than half of Thailand’s 5000 tariffs—accounting for nearly 80 per cent of Australian exports—were eliminated when the agreement entered into force. Many of these tariffs were very high. Tariffs that were not immediately eliminated are being phased down and 95 per cent of all current trade between Australia and Thailand will be completely free by 2010. Virtually all Thai tariffs on Australian imports will be eliminated by 2015. Two-way trade with Thailand grew to $13.7 billion in 2006–07, up from $7.5 billion in 2003–04 (the last financial year before the agreement came into force). Australian exports to Thailand rose from $3.1 to $5 billion over the same period.

The Singapore–Australia Free Trade Agreement entered into force in July 2003. Singapore is one of Australia’s largest trading partners. Australian merchandise exports to Singapore were worth $7.6 billion in 2006–07. The benefits of the agreement are largely concentrated in the services sector and in investment, as Singapore has virtually no tariffs. In the three years to 2006–07, Australia’s services exports to Singapore expanded by 36 per cent to $3 billion.

Current FTA negotiations

Australia is currently negotiating FTAs with China, Malaysia, Japan, Chile, the Gulf Cooperation Council and the 10 ASEAN countries (jointly with New Zealand).

China

The first round of negotiations with China was held in May 2005 following consideration by both governments of a joint FTA feasibility study. The study concluded that an FTA would deliver significant economic benefits to both countries. Australia and China share a booming economic and trade relationship—worth $54.7 billion in two-way trade in 2006–07. While our trade and economic relationship with China is already growing fast, a high-quality FTA would be of benefit to both countries. Ten rounds of negotiations have been held to date. Progress has been slow for a number of reasons. Australia’s objective is to secure a comprehensive, trade-liberalising agreement.

Japan

Negotiations with Japan began in April 2007 following the conclusion of a joint government study on the feasibility of a bilateral FTA. Market access negotiations are expected to begin in the first half of 2008.

ASEAN

Negotiations began in early 2005. There have been 12 rounds to date, and solid progress has been made. At the 12th ASEAN Economic Ministers—Closer Economic Relations consultations in Manila in August 2007, ministers agreed to aim to conclude the negotiations by mid-2008. ASEAN is a large and growing market of over 560 million people with a combined gross domestic product of over US$1 trillion. The group is an important trading partner for Australia. In 2006–07, two-way trade in goods and services with the group accounted for 16 per cent of Australia’s total trade. This is more than Australia’s trade with any singlecountry. In contrast, Australia’s investment links with ASEAN are small. ASEAN attracted only 3.4 per cent of Australia’s foreign direct investment as at December 2006. A good-quality FTA outcome will serve the interests of all ASEAN countries, including by contributing to ASEAN’s goal of economic integration, boosting regional trade and attracting more foreign investment.

Chile

Negotiations with Chile began in July 2007. Several rounds have been held to date and solid progress has been made in all areas. Australian companies have significant investments in Chile, estimated at US$3 billion in 2006. Two-way trade in goods and services reached $675 million in 2006–07. Australian businesses have a strong presence in Chile’s growing mining and energy sectors and there are expanding opportunities in Chile for Australia’s meat and dairy industries and services companies.

Gulf Cooperation Council

Negotiations with the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) began in July 2007. The Gulf Cooperation Council is Australia’s tenth-largest export market. Australia’s exports of goods and services to the Gulf Cooperation Council were worth $6.2 billion in 2006–07. It is by far our largest automotive market and an important market for our services, agricultural and metals exports. Some progress has been made in the negotiations held to date.

Malaysia

Negotiations were launched in April 2005. Malaysia is a very important economic partner and regional neighbour for Australia. Two-way trade was valued at $11.9 billion in 2006–07. There have been four rounds of negotiations and 13 inter-sessional meetings since FTA negotiations began in 2005 and progress has been made in some key areas. Officials conducted a further preparatory meeting in March 2008, and a full round will be held in mid-2008.

Further information

This fact sheet is also available to download ( PDF)

Note: Unless otherwise stated, all dollar amounts are in Australian dollars. The term ‘billion’ means ‘a thousand millions’ (one billion therefore equals 1,000,000,000); the term ‘trillion’ means ‘a million millions’ (one trillion therefore equals 1,000,000,000,000).

last updated April 2008