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Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

report cover


An Australia-United States Free Trade Agreement - Issues and Implications

This report by Monash University's APEC Study Centre finds Australia could reap wide-ranging benefits from a Free Trade Agreement (FTA) with the United States.

It argues that Australian business would not only gain from improved access to the world’s largest economy.  There would also be a number of important flow-on effects, particularly in attracting US investment to Australia and expanding linkages with the dynamic US new economy and leading edge US business practice.

The study also agrees with the importance of a WTO round launch as the Government’s number one trade priority.  The report finds that a bilateral FTA with the US could complement that objective as well as Australia’s regional engagement in Asia and the APEC forum in particular.

The APEC Study Centre report follows an economic modelling study by the Centre for International Economics released in June which showed that an Australia-US FTA could deliver significant increases in GDP and economic welfare. 

Download the Report

Cover  pdf
Chapter 1 Introduction (131KB) pdf
Chapter 2 Australia/United States trade and investment (145KB) pdf
Chapter 3 FTAs - Advantages and disadvantages (126KB) pdf
Chapter 4 What would an FTA between the Australia and the US cover? (178KB) pdf
Chapter 5 The economic impact (150KB) pdf
Chapter 6 Best practice in the global economy (143KB) pdf
Chapter 7 The bilateral relationship and an FTA (113KB) pdf
Chapter 8 Implications for Australia's global trade interests (123KB) pdf
Chapter 9 The regional dimension (131KB) pdf
Prelims Table of contents, Foreword, Executive summarypdf
Annex 1 pdf
Annex 2 pdf
Annex 3 pdf
Annex 4 pdf
Annex 5 pdf
Annex 6 pdf
Annex 7 pdf
Glossary pdf

Report in full pdf (776 KB)


The Australian APEC Study Centre, based at Monash University, was commissioned by the Department of Foreign Affairs and Trade to prepare an analysis of the impact on Australia of negotiation of a free trade agreement between Australia and the United States.

Mindful that free trade agreements perform a larger role in today’s globalised world than simple removal of trade barriers — they are instruments to promote closer relations between economies — this study was conceived from the outset to assess the impact of an agreement between Australia and the US for its wider implications.

Consider the case of investment. In the past, free trade agreements did not cover investment. However so much production today is global that in many industries the capacity to invest has become as important as a capacity to trade for companies in international business.

This is highly relevant to the economic importance of the United States to Australia. It is Australia’s second largest trading partner (just shaded in 2000 by Japan) but it is by far Australia’s largest source of foreign investment. It is without question Australia’s most important economic partner.

Trade agreements necessarily are instruments which shape relations among countries in the long term. Commitments to make changes are usually secured through a series of incremental steps staged over time to give business and the community time to adjust to change. So a long-term view of interests is necessary. It is never easy to predict the future but it is even more difficult to do so today.

The global economy is in a process of dramatic change. We talk regularly about globalisation and focus on the negatives as well as the positives. However the greatest agent for change in the global economy and global society is information technology.

We have entered the Information Age but the pace of change is so great that all we know with certainty is that the full impact of information technology will be greater and different to what we expect.

A final point to make about wider implications stems from an old truism about trade: businesses trade, not governments. Evidently one of the key impacts of closer economic relations with the US will be on the Australian business community. It has become apparent in recent years that Australian business and management culture is increasingly influenced by US mores.

With the foregoing in mind, the Australian APEC Study Centre assembled a team with multidisciplinary expertise to prepare this report. As well as reviewing the traditional impacts on trade between the two countries and of the strategic importance to Australia’s wider foreign and trade relations, the report aims to address the impact on Australia’s investment interests, the impact on Australia’s capacity to succeed in the Information Age and the impact on business and management culture in Australia.

The research group was Alan Oxley, Chairman of the APEC Study Centre and Director of International Trade Strategies, Dr Alan Moran of the Institute of Public Affairs, Patrick Xavier of the Swinburne University and Consultant to the OECD on Information and Communications Technology, David Uren, Director of and Editor of Asia Inc magazine and Kristen Osborne, a consultant with International Trade Strategies.

The group received considerable assistance from the Department of Foreign Affairs and Trade, in particular Dr Ashton Calvert, David Spencer, Bruce Gosper, Tim Yeend, Jon Richardson and Rajan Venkataraman. Susan Begley also advised on trade statistics and provided updates on previous DFAT analysis.

The APEC Centre also held a conference in Canberra on 21 June which was well attended by the business community. It received financial support from a number of businesses as well as the Department of Foreign Affairs and Trade, which met the costs of attendance by some American experts. A number of valuable papers were prepared and a number of issues considered in depth. The Centre also consulted on 22 June in Canberra with business groups on attitudes to an FTA. These activities have assisted greatly with the preparation of the analysis.

The common view of participants at the conclusion of the June conference was that a Free Trade Agreement is more important to Australia than had previously been considered. The research group reached the same conclusion as it worked on this report.

Alan Oxley

Australian APEC Study Centre

August 2001

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Department of Foreign Affairs and Trade