An open economy deeply integrated in global trade

Australia is a trading nation. We have 16 free trade agreements (FTAs) and have led the formation of multiple, regional trade agreements in the Asia-Pacific region. Low tariffs and preferential access to Asian markets make us a natural gateway for global trade. Over 70% of our trade is now with fast-growing economies in the Asia-Pacific region.

As a nation, we seek new trading opportunities. January 2022 marked the formal start of the world’s largest trade agreement, the Regional Comprehensive Economic Partnership (RCEP). Covering nearly a third of global output, the agreement links ASEAN (Association of Southeast Asian Nations) with China, Japan and South Korea – as well as Australia and New Zealand.

Investment helps power our major industries, especially in resources and energy. Foreign direct investment (FDI) has grown by approximately 8% per year for the past two decades and has now topped A$1 trillion. Our top national investors are from the US (19%), Japan (13%) and the UK (12%). But investment from other parts of Asia is rising quickly – especially from Southeast Asia.  

Shipping containers

Asian markets and export success

Close integration with dynamic economies in Asia drives wealth creation in Australia. Twelve of Australia’s top 15 export markets are in the Asian region, generating total exports worth A$326 billion in 2020. This represents three-quarters of Australia's total exports of goods and services. China receives about 36%. More than 30% collectively go to Japan, Korea, the US, the UK and India. ASEAN is also a significant market, accounting for 11% of Australia's total exports.

australias-top-15-export-markets-2020

Notes: The Asian region is defined as Asia and Oceania.
Sources: Department of Foreign Affairs and Trade, 2021, Trade statistics, Australia's trade in goods and services: 2020 financial year; Austrade

Strong trade links across the Asian region

Australia is a highly globalised economy, with trade accounting for over 40% of nominal GDP. Asian partners accounted for two-thirds of Australia’s total exports. This reflects Australia’s geographical good fortune and our free trade agreements with key Asian economies. China remained Australia’s largest trading partner in 2020, accounting for around 31% of total two-way trade. Japan and Korea continue to be important trade partners, representing around 13% of total trade. Many Australian exporters have diversified their markets. For example, the ASEAN region now accounts for almost 13% of total trade. Australia also maintains strong trading links with traditional partners. The EU and the UK account for 13% of total trade. The US accounts for another 9%.

Australia’s exports and imports of goods and services

Current prices (A$ billion)

Rank Selected economies 2017 2018 2019 2020 Share (%)
of GDP in
2020		 Share (%) of
trade in
2020		 % Growth
 2019 to 2020 5-year CAGR 
1 China 183.5 214.8 251.3 244.8 12.4 30.7 -2.6 10.1 
2 US 68.3 74.0 81.0 72.9 3.7 9.1 -10.0 0.4 
3 Japan 72.0 85.7 86.7 66.5 3.4 8.3 -23.3 0.4 
4 Korea 55.3 41.0 41.3 34.8 1.8 4.4 -15.8 -0.9
5 UK 27.4 27.2 38.6 31.8 1.6 4.0 -17.7 5.3
6 Singapore 25.3 32.0 33.2 27.0 1.4 3.4 -18.8 0.7
7 India 27.6 30.4 29.2 24.4 1.2 3.1 -16.4 3.6
8 New Zealand 27.6 29.3 31.1 23.7 1.2 3.0 -23.7 -1.0
9 Germany 21.0 23.2 22.9 21.2 1.1 2.7 -7.5 2.3
10 Thailand 23.0 25.7 23.1 19.6 1.0 2.5 -15.1 -1.7
11 Malaysia  20.8 24.1 24.0 19.4 1.0 2.4 -19.2 -0.1
12 Taiwan 15.1 17.6 20.2 16.1 0.8 2.0 -20.2 4.9
13 Vietnam  12.9 14.6 15.5 14.6 0.7 1.8 -5.6 6.9
14 Indonesia 16.4 17.6 17.7 12.9 0.7 1.6 -27.3 -4.1
15 Hong Kong SAR 18.9 17.8 15.0 12.7 0.6 1.6 -14.9 -4.4
  Other economies 149.7 179.2 187.3 154.6 7.8 19.4 -17.4 0.7
  Total all economies1 764.8 854.5 918.0 796.9 40.4 100.0 -13.2 3.1
  By regions and groups                
  APEC² 564.1 621.5 670.9 590.2 29.9 74.1 -12.0 3.6
  RCEP³ 443.0 491.6 532.4 470.9 23.9 59.1 -11.6 4.6
        ASEAN⁴ 104.6 120.7 122.0 101.1 5.1 12.7 -17.1 0.5
  EU plus UK 101.3 110.0 123.3 105.7  5.4 13.3 -14.3 2.6

Notes: 1. Totals may not always add up exactly due to rounding. Refer to the DFAT website (www.dfat.gov.au/trade/Pages/trade-and-investment) for more information. 2. Asia Pacific Economic Cooperation. 3. Regional Comprehensive Economic Partnership. 4. The Association of Southeast Asian Nations. 5. The Asian region is defined as Asia and Oceania.

CAGR = compound annual growth rate. SAR = Special administrative region of China.
Sources: Department of Foreign Affairs and Trade, 2021, Trade statistics, Australia's goods and services by top 15 partners 2021; Australian Bureau of Statistics, 2021, Australian National Accounts: National Income, Expenditure and Product, Table 3; Austrade

Diverse exports provide resilience in a difficult year

The value of Australia’s exports of goods and services reached A$436 billion in 2020. This represents a 12% decline in challenging times. Primary products accounted for 65% of total exports. The value of iron ore exports increased by 21% while coal exports fell by 32%. Beef exports also dropped as better seasonal conditions in some cattle regions prompted farmers to rebuild their herds. Falling beef prices in some export markets also contributed to the result. Overall, services exports declined by 30%. This is because Australia’s services exports – including telecoms, IT and personal cultural & recreational services – didn’t quite compensate for the 77% fall in international travel.

Australia’s trade in goods and services, 2020

Total two-way trade in 2020: A$798 billion

Australia’s trade by level of processing¹ A$ billion % Change
Exports of goods & services 2019 2020  
Primary products² 305.9 282.4 -7.7
Unprocessed food 13.9 14.4 3.6
Processed food 30.4 28.0 -8.1
Minerals 126.9 144.9 14.2
     Fuels² 126.3 89.6 -29.0
     Other primary 8.4 5.5 -34.2
Manufactured products 54.6 47.8 -12.6
     Simply transformed manufactures (excl nickel) 16.9 14.6 -13.8
     Elaborately transformed manufactures 37.7 33.2 -12.0
Other goods (incl gold) 29.4 32.9 12.1
Services 102.1 71.9 -29.6
Balance of payments adjustment³ 0.8 1.3 ..
Total exports⁴ 492.8 436.3 -11.5
Imports of goods & services      
Primary products² 63.4 48.2 -23.9
     Unprocessed food 2.5 2.6 5.0
     Processed food 19.2 19.4 1.4
     Minerals 126.9 144.9 14.2
     Fuels 38.9 23.3 -40.4
     Other primary 1.9 1.8 -0.9
Manufactured products 232.1 232.9 0.3
     Simply transformed manufactures (excl nickel) 15.4 17.4 12.8
     Elaborately transformed manufactures 216.7 215.5 -0.6
Other goods (incl gold) 12.0 12.5 4.0
Services 103.7 56.9 -45.2
Balance of payments adjustment³ 13.9 11.3 ..
Total imports⁴ 425.2 361.8 -14.9

Top 15 commodities (goods and services)¹ A$ billion Change
Ranking Exports of goods & services 2019 2020 %
1 Iron ores & concentrates 96.2 116.7 21.4
2 Coal⁴ 63.9 43.3 -32.2
3 Natural gas 48.7 36.2 -25.6
4 Education-related travel services⁵ 40.3 31.7 -21.4
5 Gold 23.4 25.5 9.1
6 Beef (fresh, chilled or frozen) 10.8 9.6 -11.2
7 Aluminium ores & conc(incl alumina) 9.8 8.3 -15.5
8 Copper ores & concentrates 6.3 7.1 13.1
9 Crude petroleum 9.5 6.2 -34.5
10 Professional services 5.9 5.5 -7.4
11 Telecom, computer & information services 5.2 5.2 -0.4
12 Personal cultural & recreational services 1.7 5.1 206.3
13 Personal travel (excl education) services 22.6 5.1 -77.4
14 Meat (excl beef), (fresk, chilled or frozen) 5.5 5.0 -9.8
15 Technical & other business services 5.3 4.8 -10.2
Ranking Imports of goods & services      
1 Passenger motor vehicles 21.4 18.7 -12.7
2 Refined petroleum 25.1 15.9 -36.9
3 Telecom equipment & parts 14.9 14.8 -0.7
4 Freight services 10.0 11.3 13.4
5 Computers 9.7 10.4 7.8
6 Gold 6.8 9.2 36.0
7 Goods vehicles 9.8 9.0 -8.5
8 Personal travel (excl education) services 46.6 8.6 -81.4
9 Professional services 8.1 8.5 4.4
10 Medicaments (incl veterinary) 7.7 8.3 7.0
11 Crude petroleum 12.6 8.1 -23.6
12 Technical & other business services 5.4 5.8 6.8
13 Telecom, computer & information services 5.2 5.6 7.2
14 Pharm products (excl medicaments) 5.4 5.6 3.2
15 Furniture, mattresses & cushions 5.0 5.2 4.8

Note: 1. Goods on a recorded trade basis, Services on balance of payments (BOP) basis, original data. 2. Includes the DFAT adjustment for coal, (based on the ABS Catalogue 5368.0, Value adjustments, June 2021. 3. BOP adjustment includes low-value goods for imports and timing and valuation adjustments. 4. BOP basis. 5. Includes student expenditure on tuition fees and living expenses.
Sources: Department of Foreign Affairs and Trade, 2021, Trade Statistics, Monthly trade data; DFAT, 2021, Trade in goods and services, Australia's goods and services by top 25 exports 2020; Austrade

A high-growth destination for A$4 trillion of foreign investment

Australia is a highly attractive destination for foreign direct investment (FDI). The total stock of FDI in Australia has risen by 7.6% per year since 2000–01. It reached A$1 trillion around 2020. Other forms of investment – including portfolio investment – grew by 8% per year. This takes total foreign investment to A$4 trillion. As a percentage of GDP, the total value of foreign investment stock grew from 126% in 2000 to about 200% in 2020. Foreign investment was hit by drought, bushfires and lockdowns in 2020, but still grew by 2.5%.

total-foreign-investment-stock-in-australia

Notes: 1. Other investment is the balance of total investment less direct investment. As such, it represents portfolio investment, financial derivatives and other investment categories from the source ABS data.
Sources: Australian Bureau of Statistics (ABS), 2021, International Investment Position, Australia: Supplementary Statistics 2021, Table 2; ABS, 2021, Australian National Accounts: National Income, Expenditure and Product, Table 3; Austrade

A magnet for investment from North America, Europe and Asia

Australia attracts investment from around the world. Over the past decade, foreign direct investment from Korea grew by 15% per year, China by 13%, Canada by 12% and Hong Kong SAR by 10%. Australia’s top three overseas investors are the US, Japan and the UK, with holdings equivalent to 19%, 13% and 12% of total FDI in Australia respectively. Over the same period, investment activities from ASEAN, mainly Singapore and Malaysia, have been solid, growing by an average of 9% per annum to almost A$60 billion. This group was the fourth largest source of FDI in Australia.

Australia's main sources of foreign direct investment stock, 2010–2020

Total value in 2020: A$1 trillion

Rank
2020		 Economy 2010
A$billion		 2019
A$billion		 2020
A$billion		 % Share
2020		 % Change
2019-2020		 % CAGR
2010-2020		 Growth ($bn)
2019-2020		 % of Australian GDP, 2020
1 US 110.3 221.4 196.3 19.1 -11.4 5.9 -25.1 10.0
2 Japan 51.1 115.9 131.8 12.8 13.7 9.9 15.9 6.7
3 UK 53.7 127.5 123.5 12.0 -3.2 8.7 -4.1 6.3
4 Netherlands 27.6 56.6 52.8 5.1 -6.7 6.7 -3.8 2.7
5 Canada 14.9 46.1 46.2 4.5 0.1 12.0 0.1 2.3
6 China 12.9 46.9 44.3 4.3 -5.4 13.1 -2.5 2.3
7 Singapore 18.7 36.2 39.9 3.9 10.4 7.9 3.8 2.0
8 Bermuda 7.5 41.9 39.9 3.9 -4.9 18.2 -2.1 2.0
9 Virgin Islands, British np 22.2 22.5 2.2 1.6 np 0.4 1.1
10 Germany 16.8 23.1 21.7 2.1 -6.0 2.6 -1.4 1.1
11 Hong Kong SAR 6.6 17.3 16.8 1.6 -3.4 9.7 -0.6 0.9
12 Malaysia 3.7 14.7 13.6 1.3 -7.3 14.0 -1.1 0.7
13 France 13.0 12.7 12.1 1.2 -4.8 -0.7 -0.6 0.6
14 Switzerland 20.9 11.6 11.6 1.1 0.0 -5.7 0.0 0.6
15 Luxembourg 1.5 9.3 9.1 0.9 -2.9 20.0 -0.3 0.5
16 Korea 2.1 7.1 8.0 0.8 12.4 14.6 0.9 0.4
  Other economies 158.1 233.0 236.6 23.0 1.5 4.1 3.6 12.0
  FDI stock – all economies 519.3 1,043.6 1,026.6 100.0 -1.6 7.1 -17.1 52.1
  OECD 340.6 653.1 635.9 61.9 -2.6 6.4 -17.2 32.3
  APEC 231.0 517.1 508.7 49.6 -1.6 8.2 -8.4 25.8
  EU (excl. UK) 80.2 117.0 112.3 10.9 -4.1 3.4 -4.8 5.7
  ASEAN 25.8 56.1 59.0 5.7 5.0 8.6 2.8 3.0
  FDI stock as a percentage of GDP 38.1 52.2 52.1          

Notes: ASEAN = The Association of Southeast Asian Nations. CAGR = compound annual growth rate. np = not available for publication but included in totals where applicable, unless otherwise indicated. SAR = Special administrative region of China.
Sources: Australian Bureau of Statistics (ABS), 2021, International Investment Position, Australia: Supplementary Statistics 2020, Table 2; ABS, 2021, Australian National Accounts: National Income, Expenditure and Product, Table 3; Austrade

Foreign direct investment and Australia’s services sector

Foreign direct investment (FDI) powers productivity growth in Australia’s domestic and export industries. Services take about half of all FDI. From 2016–2020, FDI in real estate and financial services, the two largest recipients in the services sector, rose by 12% and 13% per year respectively. Their growth rates were over twice the average growth rate (5%) of all industries. FDI in the professional, scientific and technical sector grew rapidly, at 22% per annum since 2016. Australia’s export-focused mining sector is the biggest primary-industry beneficiary, accounting for 35% of the total FDI, or A$360 billion.

foreign-direct-investment-stock-in-australia-by-industry

Notes: 1. Others includes unallocated (A$88.9bn); manufacturing (np); public administration, activities of households and of extraterritorial organisations (np); education (np); arts, entertainment and recreation (np); and other services (np).
Sources: Australian Bureau of Statistics, 2021, International Investment Position, 2020, Australia: Supplementary Statistics, Table 15; Austrade

An open trading economy for services

Australia is an open market for trade in services. According to the OECD’s Services Trade Restrictiveness Index (STRI), Australia scored 0.19 across 22 sectors in 2021. This was lower than the OECD average (0.23).1 The index ranked Australia as the second most open economy for legal services, and fifth most open for air transport. Trade in services is also growing strongly. Two-way trade reached around A$205 billion in 2019, sharply up from about A$60 billion 20 years ago. This represents an annual growth rate of 6.3% over the past two decades.

 
services-trade-restrictiveness-index-by-sector

Notes: 1. Unweighted STRI average of 38 OECD countries. 2. The number in brackets indicates the Australia’s global ranking across 38 OECD countries.

Sources: Australian Bureau of Statistics ,2022, International Trade in Goods and Services; Organisation for Economic Co-operation and Development, 2022, Services Trade Restrictiveness Index, accessed February 2022; Austrade

A broad network of trade agreements

Australia benefits from 16 free trade agreements (FTAs), including with the US, China, Japan and Singapore. We are also a member of the Regional Comprehensive Economic Partnership, which came into force on 1 January 2022. These FTAs cover approximately three-quarters of all Australian trade. Today’s network covers multiple export sectors, from agriculture and seafood to minerals and energy. These agreements deeply integrate Australia into global markets. On 2 April 2022, Australia and India signed the interim Australia-India Economic Cooperation and Trade Agreement. When it enters into force, tariffs will be eliminated on more than 85% of Australian goods exports to India.

 
Australias-free-trade-agreements

 

 Australia's multilateral free trade agreements
 

ASEAN-Australia-New Zealand FTA (2010-11)

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (2018-19)

Regional Comprehensive Economic Partnership (2022)
New Zealand  •  •
 •
Indonesia •
 
Brunei •   •
Singapore •
 •  •
Malaysia •

Thailand •
•
Philippines  •    
Vietnam  • • •
Cambodia  •   •
Laos  •   •
Myanmar •    
China     •
Korea     •
Japan   •
 •
Canada   •
  
Mexico   •  
Colombia      
Peru   •   
Chile      

Notes: 1. Australia’s FTA negotiating agenda currently includes an Australia-European Union Free Trade Agreement, an Australia-Gulf Cooperation Council Free Trade Agreement, an Australia-India Comprehensive Economic Cooperation Agreement, a Pacific Alliance Free Trade Agreement and Trade in Services Agreement. Information on the status of FTA negotiations can be found at: https://dfat.gov.au/trade/agreements/Pages/trade-agreements.aspx. 2. The Pacific Agreement on Closer Economic Relations Plus (PACER-Plus) entered into force in December 2020. Australia, New Zealand, Samoa, Kiribati, Tonga, Solomon Islands, Niue and Cook Islands are parties to the Agreement. 3. The Australia-United Kingdom Free Trade Agreement (Australia-UK FTA) was signed on 17 December 2021 but as of 2 March 2022 is not yet in force.

Sources: Department of Foreign Affairs and Trade, 2022, Australia's free trade agreements; Austrade