Free trade agreements that spark competitiveness

Australia is an open economy that is deeply integrated in global trade. A network of 15 free trade agreements grants Australian exporters preferential access to markets across Asia, and in North and South America.

In 2020, Australia joined the world’s largest free trade agreement, the Regional Comprehensive Economic Partnership (RCEP). The RCEP encompasses 2.3 billion people and 30% of global GDP. Australia is negotiating further trade agreements with the United Kingdom (UK), the European Union (EU) and India.

Around three-quarters of Australia’s two-way trade occurs within the Asia-Pacific region. Market diversification is underway to build a resilient trading network.

Australia also maintains strong trading links with traditional partners. The EU and the UK together account for 13.2% of Australian trade and the US another 9.3%.

Investors trust Australia as a stable and highly profitable destination for investment capital. Despite bushfires, drought and lockdowns, foreign investment grew 2.5% in 2020.

Sustained investment in Australia demonstrates our ongoing appeal. Over the past 10 years, the total stock of foreign direct investment in Australia has grown, on average, 7% per year. The US, Japan, the UK, the EU, the Netherlands and Canada are still our biggest investors.

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Asian markets power 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$357 billion in 2019–20 (three-quarters of our total exports of goods and services). China receives about one-third. A further 32% collectively go to Japan, Korea, the US, the UK and India.

Austrade-BM-australias-top-15-export-markets-2019-20

Notes: The Asian region is defined as Asia and Oceania.
Sources: Department of Foreign Affairs and Trade, 2020, Trade statistics, Trade in goods and services: 2019–20 financial year; Austrade

Strong trade links across the Asian region

Australia is a highly globalised economy, with trade accounting for 44% of nominal GDP. The Asian region5 accounted for almost three-quarters of two-way trade in goods and services in 2019–20. Although China is Australia’s largest trading partner, trade is diversified across the region. For example, the ASEAN group of countries accounts for 13% of Australia’s two-way trade, a higher percentage than with the EU. The new Regional Comprehensive Economic Partnership was officially inaugurated in November 2020, and this bloc currently accounts for almost 60% of Australia’s two-way trade.

Australia’s exports and imports of goods and services

Current prices (A$ billion)

Rank Selected economies 2016-17 2017-18 2018-19 2019-20 Percentage
of GDP in
2019-20		 Share (%) of
total in
2019-20		 CAGR (%)
From 2014-15
to 2019-20
1 China 174.3 195.0 235.1 251.2 12.7 28.8 11.7
2 US 66.5 69.9 76.7 80.8 4.1 9.3 4.1
3 Japan 68.5 77.4 88.3 79.1 4.0 9.1 3.2
4 Korea 38.6 52.4 41.4 38.9 2.0 4.5 1.7
5 UK 27.8 28.1 30.5 36.7 1.9 4.2 9.8
6 Singapore 24.7 27.9 32.1 31.1 1.6 3.6 1.9
7 New Zealand 26.4 28.3 30.6 28.7 1.4 3.3 3.1
8 India 25.7 29.1 30.4 26.2 1.3 3.0 7.3
9 Germany 20.9 22.4 23.2 21.8 1.1 2.5 4.1
10 Malaysia 19.8 21.4 25.1 21.6 1.1 2.5 1.5
11 Thailand 21.8 24.6 24.7 21.6 1.1 2.5 1.0
12 Taiwan 14.7 15.9 19.7 18.8 1.0 2.2 7.6
13 Indonesia 16.5 16.7 17.7 16.2 0.8 1.9 0.7
14 Vietnam 11.8 13.3 15.5 15.2 0.8 1.7 7.6
15 Hong Kong SAR 19.7 18.7 15.3 13.2 0.7 1.5 -3.2
  Other economies 159.0 158.7 186.3 171.9 8.7 19.7 2.4
  Total all economies1 737.0 799.7 892.6 873.1 44.1 100.0 5.3
  By regions and groups              
  APEC² 528.3 587.0 652.1 645.3 32.6 73.9 5.8
  RCEP³ 408.9 463.2 518.4 511.7 25.8 58.6 6.5
        ASEAN⁴ 101.0 110.1 123.0 113.8 5.7 13.0 2.4
  EU plus UK 100.7 106.5 114.9 115.4 5.8 13.2 5.4

Notes: CAGR = compound annual growth rate. SAR = Special administrative region of China. 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 the 21 economies that are members of the APEC forum.
Sources: Department of Foreign Affairs and Trade, 2020,Trade statistics, Trade time series data; Australian Bureau of Statistics, 2020, 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 almost A$475 billion in 2019–20, about a 1% increase in challenging times. Primary products accounted for 63% of total exports. Iron ore exports increased by 32% while coal exports fell by 22%. Beef exports also increased, partly thanks to our high agricultural standards. Overall, services exports declined by 5%. This is because Australia’s diversified services exports – including IT, telecoms, and professional and financial services – didn’t quite compensate for the fall in international travel.

Australia’s trade in goods and services, 2019–20

Total two-way trade in 2019–20: A$873 billion

Australia’s trade by level of processing¹ A$ billion % Change
Exports of goods & services 2018-19 2019-20  
Primary products² 294.5 298.8 1.5
     Unprocessed food 13.8 14.3 3.5
     Processed food 28.8 30.8 6.8
     Minerals 109.6 132.2 20.6
     Fuels² 132.0 114.8 -13.0
     Other primary 10.3 6.7 -34.8
Manufactured products 53.8 52.2 -3.1
     Simply transformed manufactures (excl nickel) 17.9 15.3 -14.5
     Elaborately transformed manufactures 35.9 36.9 2.7
Other goods (incl gold) 24.2 30.7 26.8
Services exports 97.3 92.3 -5.1
Balance of payments adjustment³ 0.9 0.9 -3.7
Total exports⁴ 470.8 475.0 0.9
Imports of goods & services      
Primary products² 64.2 57.7 -10.1
     Unprocessed food 2.3 2.5 8.5
     Processed food 18.4 19.7 6.8
     Minerals 1.2 1.2 -2.5
     Fuels 40.2 32.5 -19.1
     Other primary 2.1 1.8 -11.8
Manufactured products 231.0 227.7 -1.4
     Simply transformed manufactures (excl nickel) 15.4 16.6 7.9
     Elaborately transformed manufactures 215.6 211.0 -2.1
Other goods (incl gold) 11.4 13.3 15.9
Services imports 101.8 87.4 -14.1
Balance of payments adjustment³ 13.3 12.1 -9.1
Total imports⁴ 421.8 398.2 -5.6
Two-way trade 892.6 873.1 -2.2

Top 13 commodities (goods and services)¹ A$ billion % Change
Exports of goods & services 2018-19 2019-20  
Rank Commodity      
1 Iron ores & concentrates 77.5 102.7 32.4
2 Coal⁴ 69.6 54.1 -22.2
3 Natural gas 49.7 47.5 -4.4
4 Education-related travel services⁵ 37.8 37.5 -0.7
5 Gold 18.9 24.4 29.3
6 Personal travel (excl education) services 22.5 16.3 -27.2
7 Beef (fresh, chilled or frozen) 9.5 11.3 18.8
8 Aluminium ores & conc (incl alumina) 11.4 8.9 -21.9
9 Crude petroleum 8.5 8.6 0.9
10 Copper ores & concentrates 6.0 6.7 11.9
11 Professional services 5.6 6.0 7.0
12 Telecom, computer & information services 4.7 5.4 13.9
13 Financial services 5.0 5.3 7.3
Imports of goods & services 2018-19 2019-20  
Rank Commodity      
1 Personal travel (excl education) services 46.3 33.3 -28.2
2 Refined petroleum 25.1 21.7 -13.6
3 Passenger motor vehicles 21.6 19.1 -11.5
4 Telecom equipment & parts 14.6 15.2 4.4
5 Computers 9.8 10.4 6.5
6 Freight services 10.1 10.4 2.6
7 Crude petroleum 13.4 9.5 -29.5
8 Gold 5.5 8.8 59.7
9 Professional services 7.7 8.6 10.8
10 Medicaments (incl veterinary) 7.5 8.1 8.6
11 Goods vehicles 10.6 8.1 -23.6
12 Pharm products (excl medicaments) 4.8 6.1 25.5
13 Telecom, computer & information services 4.6 5.7 23.3

Notes: 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 September 2020, Value adjustments. 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, 2020, Trade Statistics, Monthly trade data; Department of Foreign Affairs and Trade, 2020, Trade in goods and services, Australia's goods and services by top 25 exports 2019–20; 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, on average, by about 8.0% per year since 2000, reaching A$1 trillion around 2020. Other forms of investment – including portfolio investment – grew by 8.4% per year, taking total foreign investment to A$4 trillion. As a percentage of GDP, the total value of foreign investment stock grew from 120% in 2000 to 203% in 2020. Foreign investment was depressed by drought, bushfires and lockdowns in 2020, but still grew by 2.5%.

Austrade-BM-total-foreign-investment-stock-in-australia-2000-01-to-2019-20-min

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 2020, 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 flows into 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.

Austrade-BM-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

Australia’s liberalised trade with Asia

Australia benefits from 15 free trade agreements (FTAs), including with the US, China, Japan and Singapore, and with countries participating in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. 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. They make Australia a natural gateway for trade between Asia-Pacific economies.

 
Austrade-BM-australias-free-trade-agreements

 

Austrade-BM-australias-free-trade-agreements-table

Notes: 1. The Regional Comprehensive Economic Partnership has been concluded but was not in force at the time of publication. As at March 2021, Australia’s FTA negotiating agenda included: an Australia-European Union Free Trade Agreement, an Australia-India Comprehensive Economic Cooperation Agreement, an Australia-UK Free Trade 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.
Sources: Department of Foreign Affairs and Trade, 2021, Australia's free trade agreements; Austrade