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Australia's Trade
Policy
The Australian Government's ambitious trade policy is
geared towards increasing economic activity, creating
jobs and getting a fair deal for Australia in the international
marketplace. This all adds up to more jobs, more choice
for consumers, and a higher standard of living for all
Australians.
The Minister for Trade in conjunction
with the Department of Foreign Affairs and Trade, is
responsible for negotiating with foreign Governments
to ensure better trade conditions for Australian products.
The Government pursues this goal at every level:
Multilaterally through the World Trade
Organization (WTO) by negotiating trade agreements which
provide the legal ground-rules for international trade
Regionally through Asia Pacific Economic Cooperation
(APEC) and other international fora by strengthening
regional trade links and pursuing common trade and economic
goals
Bilaterally through the negotiation of free trade agreements,
such as with Singapore, Thailand and the United States
that deliver substantial gains to Australia and which
cannot be achieved in a similar timeframe elsewhere.
We also work to expand markets and address market barriers
in a range of countries and sectors , including Japan
and China.
The Government places a high priority on consultation
with business and the community, to ensure that the
trade policy objectives developed by the Government
sufficiently reflect the views, concerns and ambitions
of the Australian public.
The Department provides services
to Australian business to access overseas markets in
coordination with Austrade. These include databases
of information on key markets and sectors. We also provide
specialised student kits on trade policy.
Source:
Government of Australia, Department of Foreign Affairs
Australian merchandise trade, 2004-05:
Exports (A$m): 126,703
Imports (A$m): 149,519
Total trade (exports + imports) (A$m): 276,222
Merchandise trade deficit (A$m): 22,816
Australia's trade in services, 2004:
Exports of services (A$m): 34,457
Imports of services (A$m): 35,578
Services trade deficit (A$m): 1,121
Australia's investment, as at 30 June 2005:
Level of Australian investment abroad (A$m): 590,365
Level of foreign investment in Australia (A$m): 1,107,192
Source:
Department of Foreign Affairs and Trade, Australia
Exports of goods
and services
Based on DFATs Trade Exports Classification (TREC),
total Australian merchandise exports comprised 56 per
cent Primary products, 9 per cent Simply Transformed
Manufactures (STMs), 22 per cent Elaborately Transformed
Manufactures (ETMs) and 13 per cent other merchandise
exports. The overall composition of Australia's merchandise
exports has been similar since 1998.
Major Australian Exports, 2004-2005
(A$ million)
Coal :17,116
Iron ore: 8,079
Crude petroleum: 5,696
Non-monetary gold: 5,642
Bovine meat: 4,880
Australia's main merchandise export
destinations, 2004-05
Japan: 19.7%
China: 10.2%
Republic of Korea: 7.7%
United States: 7.4%
New Zealand: 7.2%
Source:
Department of Foreign Affairs and Trade, Australia
Imports of goods
and services
Australias merchandise imports (based on DFATs
TREC classification) have historically been dominated
by ETMs. Other components imported into Australia comprise
Primary products, STMs, ETMs and Other merchandise imports.
Major Australian imports, 2004-05 (A$m):
Passenger motor vehicles: 11,597
Crude petroleum :9,704
Computers: 5,791
Medicaments (incl. veterinary): 5,719
Telecommunications equipment: 5,031
Australia's main merchandise import
sources, 2004-05:
United States: 14.2%
China: 13.3%
Japan: 11.5%
Germany: 5.8%
Singapore: 4.9%
Source:
Department of Foreign Affairs and Trade, Australia
BALANCE OF PAYMENTS DECEMBER QUARTER 2004
Data released this morning by the Australian Bureau
of Statistics show that Australias current account
deficit (CAD) for the December quarter 2004 was $15.2
billion reflecting a widening of both the net income
deficit and the trade balance.
The net income deficit increased by $758
million to $8.2 billion, driven by higher profits earned
by foreign-owned Australian based companies, consistent
with strong growth in profits across the economy. The
trade deficit rose by $180 million to $7.0 billion,
with solid export growth offset by continued strong
growth in import volumes.
Export volumes grew by 1.3 per cent in
the December quarter, mainly reflecting growth in Australias
exports of resources and manufactured goods. Exports
of other mineral fuels (mainly oil and LNG) grew by
11.7 per cent in the quarter, while exports of metal
ores and coal grew by 6.1 and 4.8 per cent. Exports
of rural commodities fell in the December quarter as
late rains adversely affected the size of the 2004 grain
harvest. Many rural areas are also still experiencing
low sub-soil moisture levels after the drought, again
keeping rural output down. Service exports fell by 1.2
per cent in the December quarter.
Import volumes grew by 3.2 per cent in
the December quarter, to be 13.1 per cent higher through
the year, consistent with the current strength of national
income growth. Imports of capital goods are 19.4 per
cent higher through the year, consistent with very strong
growth in business investment. Consumption and service
imports have also been growing solidly, supported in
part by strong growth in household incomes in line with
a falling unemployment rate and solid wages growth.
The terms of trade grew by 1.6 per cent
in the December quarter to be 9.9 per cent higher through
the year, and are now at their highest level since the
September quarter 1974. The increase in the terms of
trade over the past year mainly reflects strong increases
in coal, iron ore and base metal prices.
Australias net foreign debt was
$422 billion (current prices) in the December quarter,
an estimated 51 per cent of GDP. The general government
share of Australias net foreign debt has fallen
sharply in recent years, accounting for only 5.0 per
cent of total net foreign debt in the December quarter
well below the 17.2 per cent share in 1996. With
the debt servicing ratio currently at 9.3 per cent of
export income, Australias ability to service its
net foreign debt is very strong, and certainly much
stronger than in the early 1990s when the debt servicing
ratio hit a peak of 20 per cent of export income.
While Australias export volumes
rose in the December quarter, export growth over the
past year has been flat and lower than is typical for
this stage of the world economic cycle. In part, this
is due to the high level of the exchange rate, which
in trade weighted terms was more than 8 per cent higher
than the post-float average over the December quarter.
Furthermore, while strong growth in the world economy,
particularly in the United States and China, has created
a surge in demand for mineral and energy commodities,
long lead times in the planning and construction of
new mining projects have meant that supply increases
have been slow. Combined with rail and port bottlenecks,
which may reflect inadequate investment by state governments,
this has resulted in only moderate growth in the volumes
of our commodity exports over recent quarters. In value
terms, however, Australia has benefited from a sharp
increase in mineral prices on world markets.
Over the past three years, Australias
mining industry has invested around $26.5 billion in
the expansion of productive capacity. As this new capacity
comes on line, including over 2005 06, it is likely
that Australias exports of mineral commodities
will increase significantly. Combined with easing import
growth, this should see a narrowing of Australias
current account deficit over the period ahead. Moreover,
increases in export prices coming into effect in April
2005 should see the CAD narrow further, consistent with
forecasts released today by ABARE for 16 per cent growth
in commodity export earnings in 2005-06.
In marked contrast to previous increases
in the CAD, the current increase has occurred at a time
of stability in Australias macroeconomic aggregates.
The Governments budget is in surplus, more than
$70 billion of government debt has been repaid since
March 1996, inflation and interest rates are exceptionally
low by historical standards and the unemployment rate
is at 30 year lows. It is nonetheless important to maintain
a strong programme of economic reforms that will further
strengthen the Australian economy and enhance the sustainability
of economic growth.
Source:
Commonwealth Treasurer, Press Release
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