Australia is a leading economic influencer in the South Pacific. Its Pacific location grants it access to the world’s powerful Asian markets. Furthermore, it connects in solidarity with other Pacific Rim countries, making it an approachable nation for many to do business with.
But what formal trade ties does Australia actually have, and who is Australia looking to shake hands with next? Find out why Australia’s far-reaching connections offer diverse export opportunities.
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Australian – Trade deals are a gold mine for investors and exporters
Trade agreements make investment and trading easier for businesses of participating countries by opening their markets to each other. They can take many forms and have many different layers for promoting further cooperation and integration between countries.
These deals often include agreements to reduce tariffs on goods imported from member countries. Additionally, countries can agree to change regulations in highly-protected markets or industries, allowing international players easier access. Member countries sometimes agree on investment projects to boost growth, employment, and competitiveness. Indirectly, preferential visa access for foreign individuals also sweetens the deal for multinational businesses.
Trade deals can be bilateral – between two countries – or multilateral, giving member countries preferential trade access to several markets under one contractual roof. For traders, this means greater connectivity with international business communities, and more affordable opportunities to expand into new markets.
Importantly, the strategic interests of member countries inevitably focus on the continuous growth of their economies. This builds an insatiable desire for more from each other. Trade deals between countries are therefore reviewed and revamped regularly, to further reduce trade barriers and strengthen trade relationships.
Snapshot of Australia’s key export partners
Australia has an impressive GDP of US$1.323 trillion. It is ranked as the world’s fifth freest economy, and is experiencing an unprecedented record of consecutive growth. Key to this growth is well-established export channels.
Below is a snapshot of Australia’s top export destinations for 2018:
|Rank||Country||Export value (US$ billion)||Top goods exported|
|1||China||74||Ores, mineral fuels, meat and animal products, cereals, wood, copper|
|2||Japan||26.2||Meat (incl. fish) and animal products, fruit and vegetables, fuels, aluminum,|
|3||South Korea||13.6||Meat, sugar, wheat, coal, iron ore, natural gas aluminum|
|4||India||10.1||Coal, vegetables, ores, gold, textiles, chemicals|
|5||United States||9.2||Meat, pharmaceuticals, optical and medical instruments, machinery|
|6||Hong Kong||7.9||Fruit and vegetables, meat, telecommunications, sound recording apparatus and equipment|
|7||New Zealand||7.1||Inorganic chemicals, machinery, food products, paper, electronics, vehicles, plastics|
|8||Taiwan||6.7||Coal, iron ore, copper, zinc, meat, wheat, dairy|
|9||Singapore||4.9||Mineral fuels, pearls and precious stones, animal and vegetable fats and oils, machinery, meat|
|10||Thailand||4.8||Perls and precious stones, crude petroleum, gold, aluminum, coal|
Australia’s top 10 export partners reflect its geographic proximity to powerful Asian markets. The country’s traditional Western comrades fill the remaining gaps of an Asian-dominated export market.
Supporting this immense export economy is a number of key trade deals and agreements with key trading partners.
Trophy trade deals with the Land Down Under
Australia is highly dependent on international trade. To maintain its $243 billion-dollar export market, Australia has secured a number of free trade agreements (FTAs):
- China-Australia (ChAFTA)
- Japan-Australia (JAEPA)
- Korea-Australia (KAFTA)
- Australia-United States (AUSFTA)
- Australia-New Zealand (ANZCERTA)
- Singapore-Australia (SAFTA)
- Thailand-Australia (TAFTA)
- Australia-Chile (ACl-FTA)
- Malaysia-Australia (MAFTA)
- ASEAN-Australia-New Zealand (AANZFTA)
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
This extensive list makes Australian goods a popular commodity in many economies. Preferential access into highly developed and emerging markets spoils Australian exporters and investors for choice.
As Asia growth starts to slow, however, Australia is looking further afield to identify new opportunities for its thriving export industries.
Australia courts new partners to boost trade diversity
Australia’s ambitious international trade agenda identifies and prioritizes a number of developing partnerships.
Some FTAs that have been signed but are not yet in force include: Hong Kong, Indonesia, Peru, and the Pacific Agreement on Closer Economic Relations (PACER). The latter is a deal incorporating Australia, New Zealand and eight of their Pacific Island neighbors.
Looking further ahead, negotiations are underway between Australia and a number of countries to secure future FTAs. Australia is currently negotiating:
- Pacific Alliance FTA: Chile, Colombia, Mexico, Peru
- Australia-India Comprehensive Economic Cooperation Agreement
- Australia-European Union FTA
- Australia-Gulf Cooperation Council (GCC) FTA: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates
- Regional Comprehensive Economic Partnership (RCEP): ASEAN, China, India, Japan, South Korea, New Zealand
- Environmental Goods Negotiations: reducing tariffs on environmentally friendly goods among 45 countries.
- Trade in Services Agreement: establishing liberalized services among 50 economies.
Endless options for exporters and investors
What these negotiations reflect is a willingness by Australia to expand its trade connections to regions previously overlooked for export opportunities. Creeping into Australia’s sphere is Latin America, Europe, the Persian Gulf and South Pacific.
This is great news for investors and foreign businesses looking to expand. Australian expansion or investment doesn’t necessarily have to focus on current key export markets to experience long-term success.
As Australia’s prolific export economy is granted easier access to a larger number of diverse markets, its export economy can flourish. These agreements will help the nation identify new export potential. This lowers risk and increases reward-potential for foreign investors and companies looking to set up in Australia.
Looking to expand or invest? Talk to us
Whether you’re a foreign investor ready to make the move into Australia or you’re already in the country and require legal assistance, working with an experienced back-office service provider makes life easy. At Biz Latin Hub, we provide customized business solutions in local market entry, company incorporation, due diligence, recruitment, visa processing, accounting, taxation, law, and more.
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Contact us now, or visit our website at bizlatinhub.com to find out how we can support your commercial success.