Trade and investment
Australia’s two-way trade in goods and services was valued at $443.6 billion in 2006-07, or about 1 per cent of total world trade. Japan is Australia’s largest trading partner, followed by China, the United States, the United Kingdom and Singapore.
Australia’s exports of goods and services grew by 10 per cent to $215.8 billion in 2006-07 —about 21 per cent of the country’s GDP. Australia’s exports of goods and services have grown in value terms by an average of 7.5 per cent per annum over the last five years.
Australia’s businesses are competitive across a wide range of sectors. Australia has long been a major exporter of agricultural, minerals and energy commodities. More recently, Australia has diversified into new services and sophisticated manufacturing export markets.
Australia’s biggest export sector is minerals and fuels, followed by the services, manufactures and rural sectors (see Figure 1).
Figure 1
Australia’s exports by sector ($ billion – balance of
payments basis)
Japan is Australia’s leading market for exports of goods and services ($35.5 billion in 2006-07), followed by China ($26.4 billion), the United States ($15.5 billion), the Republic of Korea ($14.9 billion) and New Zealand ($12.7 billion).
Shipping containers at port in Sydney. The total volume passing through the city's port between July and December 2006 was 13.9 million tonnes.
Australia’s major import items were passenger motor vehicles, crude petroleum, personal travel services (excluding education), freight transportation services, refined petroleum, and computers. The United States was Australia’s largest source of imports, followed by China and Japan.
Primary products
Australia’s traditional export strengths—primary products in agriculture, minerals and energy—continue to make a strong contribution to national prosperity. Exports of Australian primary products have grown by an average 9.2 per cent a year since 2001-02.
The value of mineral and energy exports rose by 10 per cent in 2006-07 to reach $74.2 billion in response to rapid growth in global demand, particularly from emerging economies such as China.
In 2007, Australia was the world’s largest exporter of coal and wool, and the 2nd largest exporter of iron ore, beef, and barley.
Services
In 2006-07, services exports reached $46.2 billion—21 per cent of total exports. Personal travel (excluding education) and passenger services exports totalled $15.7 billion—7.3 per cent of Australia’s total export earnings. Exports of professional and business services generated $5.9 billion.
Tourism is Australia’s largest services export industry. The number of international visitors to Australia reached a new high in 2006-07, at 5.6 million. By 2015, Australia expects to attract almost 8.4 million international visitors.
In 2006-07, education services exports continued to perform strongly, totalling around $11.6 billion. Some 383,818 full-fee students were enrolled in Australia in 2006.
Australia was ranked the third most technology-savvy country in the world in the 2007 Globalisation Index (conducted for Foreign Policy by consulting firm A.T. Kearney).
Supplier of advanced manufactures
In 2006-07, elaborately transformed manufactures (ETMs) accounted for around 65 per cent of Australia’s total manufactured exports. Australia’s success in part reflects the ability of its exporters to integrate with global supply chains in a number of industries.
Since 1996-97, exports of ETMs, with high levels of value added, have grown at an average annual rate of 3.7 per cent. Export successes in the advanced manufacturing sector include motor vehicles to the Middle East, New Zealand, South Africa and Papua New Guinea. Australia is also developing a competitive edge in high-technology exports, such as medical and scientific equipment.
Australia’s top 25 merchandise and service exports in 2006-07 are shown in Figure 2.
Figure 2
Australia’s top 25 merchandise and service exports 2006-07
($b)
(a) Excluding education-related travel.
(b) Includes education-related travel and other education services. The ‘other education services’ component for 2006-07 is a DFAT estimate. ABS to release actual data in May 2008.
(c) Mostly wine.
SOURCE: DFAT STARS DATABASE & ABS CATALOGUE 5368.0
Passenger motor vehicle exports have more than doubled since 1996-97, expanding into markets such as the Middle East, where cars built for Australia’s rugged conditions have an advantage. Over the past decade, exports of passenger motor vehicles have increased by an average of 11.7 per cent a year and in 2006-07 were worth $2.7 billion.
Exports of medical instruments have grown almost fourfold since 1996-97, at an average annual rate of 12.1 per cent, to reach $916 million in 2006-07.
A wool classer spreading a fleece. The sheep trade continues to form a major part of Australia's export industry.
Austrade—the Australian Trade Commission—is the Australian Government’s international trade 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 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 (portfolio, direct, financial derivatives and other investment) at 30 June 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 (portfolio, direct, financial derivatives and other investment) at 30 June 2007 totalled $921 billion.
Over the decade to 2006, Australia was the 5th largest net recipient of FDI in the OECD (OECD 2007).
APEC 2007
In 2007, the Australian Government hosted the Asia–Pacific Economic Cooperation (APEC) forum. APEC is the premier forum for facilitating economic growth and prosperity through the promotion of trade and investment liberalisation in the Asia–Pacific region.
From January to September 2007, more than 100 days of ministerial, officials-level and business-group meetings were held across the country. These culminated in Sydney with the APEC Economic Leaders Meeting, which brought together the leaders of 21 regional economies, including the United States, Japan and China.