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Free Trade with the US: An Overview


Australian-US Trade

The United States is Australia’s largest two-way investment partner, with two-way investment stock reaching over $1.1 trillion in December 2013.

In 2013-14, the United States was Australia’s third-largest two-way trading partner in goods and services (after China and Japan), at $58.2 billion.

The Australia-United States Free Trade Agreement (AUSFTA) entered into force on 1 January 2005. Upon AUSFTA's entry into force, more than 97 per cent of Australia's non-agricultural exports to the United States (excluding textiles and clothing) became duty free and two-thirds of agricultural tariff lines went to zero. Under AUSFTA, for the first time, Australian companies have access to the federal government procurement market in the United States and the government procurement markets of 31 US states. Since AUSFTA entered into force, bilateral trade has grown by around one third. (Source: DFAT)
Data: Department of Foreign Affairs and Trade

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Foreign Direct Investment

Australia’s global share of foreign direct investment (FDI), measured in US dollars, was 2.3 per cent in 2013. FDI into Australia was US$592 billion in 2013, up from US$237 billion in 2003.

As a percentage of GDP, FDI in Australia remained strong at 39 per cent in 2013 on the back of continued economic expansion and integration with trading partners, particularly the Asian region. Australia’s 74 per cent growth in FDI over the five years to 2013 is well above the 48 per cent growth achieved by other developed economies.

Direct investment from the United States has increased substantially from the mid-1980s, particularly following the introduction of the AUSFTA in 2005.

US investment stock in Australia is worth nearly $160 billion, accounting for 26.7% of FDI there.

US investment in Australia dramatically increased during the energy and mining boom (2006-2011) and continues at a significant level.

Australian investment in the US has more than doubled since 2001.

There are 129 Australian majority-owned companies and affiliates operating in the US, with over 960 locations in 45 states.


There are 1,813 US majority owned companies and affiliates operating nearly 8,500 facilities and offices across all eight states and territories of Australia.



Data: Department of Foreign Affairs and Trade and the US Studies Centre

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Exports


Key Australian exports to the United States include meat (US$1.5 billion in 2013), optics and medical instruments ($695 million), natural resources such as ore and aluminium ($613 million), and alcoholic beverages ($499 million).


Data: US Studies Centre

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Australian Industry


Australia is a global leader in five significant and diverse sectors: agribusiness, education, tourism, mining and wealth management. Ongoing demand across these sectors is expected to drive trade and investment in Australia and globally.

Data: US Studies Centre

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People and Jobs

More than 300,000 US jobs are directly or indirectly supported by exports to Australia. Exports to Australia directly supported more than 158,000 jobs across the US in 2013, with a further 150,000 indirectly supported.

Six states had at least 6,000 jobs directly supported by exports to Australia, and an additional 29 states had at least 1,000 jobs directly supported.

There were 93,864 people of Australian ancestry living in the United States in 2013. The number of people of Australian ancestry living in the US has increased by 19.3% since 2000.

Twenty-six states had more than 1,000 Australian American residents in 2013, representing all regions of the US.



Data: US Studies Centre


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Free Trade with the US: An Overview


Ahead of this year’s 10th anniversary of the Australian-US Free Trade Agreement, here is all you need to know about the deal.


History


Brought into effect on January 1, 2005, the AUSFTA was first put on the table in the early 1990s. Due to some political resistance, it didn’t formally begin to take shape until 2001, when President George W. Bush and Prime Minister John Howard both started to pursue the agreement.

After five rounds of negotiations held across the two countries, it was signed off in Washington D.C in May 2004.


Manufacturing

  • Duties on more than 97 per cent of US non-agricultural tariff lines (excluding textiles and clothing) became duty free from day one of the Agreement.
  • Access to the US Federal Government procurement market valued at over US$535 billion a year (2011).
  • The 25 percent tariff on light commercial vehicles that previously kept Australian utes out of the US market was removed immediately.
  • Our auto parts industry exports to the United States can benefit from the immediate elimination of tariffs.
  • The 50 percent tariff on merchant ship repairs and maintenance, part of the US’s maritime protection under the Jones Act, was removed.

Agribusiness and farming

  • About 66 per cent of agriculture tariffs went to zero immediately, with a further 9 percent dropped to zero on 1 January 2008.
  • Our duty free beef quota will be substantially increased — growing by 18.5 per cent over 18 years, with over-quota beef exports benefiting from  reduced duty from 2013, ahead of unlimited duty free access commencing in 2023.
  • Our lamb and sheep meat producers had most tariffs reduced to zero immediately, with the rest becoming duty free in 2008.
  • Our exports of quota constrained dairy to the US will receive relief through guaranteed annual quota increases.
  • Australia got immediate zero tariff treatment for horticulture products such as oranges, mangoes, mandarins, strawberries, tomatoes, cut flowers, and fresh macadamias.
  • For the first time, avocados from Australia have access to the US market, of up to 4000 tonnes per year.
  • For cereals, we received immediate zero tariffs for wheat and cereal flour mixes.
  • Processed foods tariffs reduced to zero in 2008 for a range of fruit juices and for baby foods.
  • For our wool industry, an industry priority of zero tariff for greasy wool was achieved in 2008, and for other wool items within 10 years (2014).
  • Our wine producers will have the benefit, in what is already a major market, of all tariffs reducing to zero in 2015.
  • Our peanut industry, which previously had no access to the US market, received a quota of 500 tonnes in 2005, expanding over time.
  • Australian seafood exports received duty free treatment upon entry into force.
  • Immediate removal of a 35 per cent tariff on canned tuna provided duty free access to the US market.

Service Industry

  • Australian services exports to the United States received legal protections that guarantee market access and non-discriminatory treatment.
  • We have important commitments ensuring non-discrimination against Australian service suppliers in a market of more than 300 million people — a valuable improvement on the commitments we had from the United States in the WTO.
  • We have secured a robust framework that should promote the mutual recognition of qualifications in professional services. Problems with recognition of qualifications can be a major hindrance for the export of professional services.
  • Australia is a net exporter of education services to the United States, which benefits not only our universities, but all businesses that provide services to US students when they live in Australia.
  • We now have a framework for cooperation in financial services linking us into the largest financial services market in the world.
  • Recognising the value of pursuing more liberal air services arrangements, we negotiated a bilateral Open Skies Agreement in 2008.
  • In telecommunications, we have commitments on market access and a solid framework for pro-competitive regulation, as well as a mechanism for continuing engagement.

Innovation and Creative Industries

  • Closer harmonisation of Australian and US intellectual property laws benefit Australian exporters, by creating a more familiar and certain legal environment, and Australian innovators, and by helping them to attract US investment.
  • Australian copyright industries (including publishing, filmmaking and music) benefit from an extended term of copyright protection, an expeditious process that allows for copyright owners, Internet Service Providers and subscribers to deal with allegedly infringing copyright material on the Internet, and agreed criminal standards for copyright infringement.
  • Australia and the United States will work to further reduce differences in laws and practices relating to patents, trademarks and designs, to further assist our right holders to protect their intellectual property in the US market
  • The AUSFTA demonstrates to our trading partners the benefits of strong intellectual property laws and reinforces Australia’s reputation as one of the world’s leading countries in protecting and enforcing intellectual property rights.
  • Australia retains the flexibility to implement the Agreement in a way that meets our domestic circumstances, for example, providing a mechanism to introduce public interest exceptions in relation to technological protection measures

Exporting

  • Australia gains the benefit of preferred status as an FTA partner with regard to any future global safeguard actions — that is, we will be exempted from safeguard restrictions almost automatically, just as Canada was for steel and lamb.
  • The US will waive the Merchandise Processing Fee levied on all imports, a saving to Australian industry of about US$10 million a year.
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