This report examines changes

in the composition of world trade and in imports in three major

markets (Japan, the United States and Korea). It concludes that

manufactures and services trade remained the fastest growing

sectors of world trade in the 1990s, although agriculture has

grown faster than in the 1980s. The report highlights the role

of successive multilateral trade rounds in the expansion of manufactures

trade since the Second World War, along with rising incomes,

technological change, and the expansion of cross-border investment.The

report points out that Australia's own exports have continued

to diversify over the 1990s, with rapid growth in elaborately

transformed manufactures and services. Trade liberalisation

in Australia has contributed to diversification. As a result

of continued diversification, Australia's exports are now divided

between the four bases of agriculture, minerals, manufactures

and services.

The report finds that manufactures

was the most dynamic import sector in Japan (up to its 1998 recession)

and in the United States, while services grew most rapidly in

Korea up to its economic crisis. It argues that, given Australia's

export specialisation, changes in the composition of imports

into Japan and the United States had adverse consequences for

our market share in these countries in the first part of the

1990s. However, the report finds that Australia again built

market share in each of the three markets studied over the past

3-4 years.