AANZFTA: Where Australia’s history and geography meet

This year marks the 10th birthday of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA).

In today’s environment of fractious global relations, this 12-country agreement between the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand stands out as an important meeting of minds on the rewards that come with free trade.

Over 600 million people call the countries covered by AANZFTA home. Over the past 10 years, people in this region have enjoyed economic growth that has been the envy of the world. Growth on this scale comes from what the 12 member countries have to offer each other and the rest of the world:

  • Sophisticated services, including the financial and health services sectors of Singapore and Australia
  • Abundant agricultural resources in Australia, New Zealand, Indonesia and Vietnam
  • Globally recognised manufacturing skill in Thailand and Vietnam
  • Rich resource deposits in Malaysia, Australia and Indonesia.

AANZFTA’s 10th birthday is therefore an opportunity to recognise the many happy returns underpinned by this commercial agreement.

Formalising the informal

Despite the relative youth of the AANZFTA agreement, ASEAN nations are actually among Australia’s oldest commercial partners.

From the Makassans of Indonesia trading with the people of Arnhem Land, to colonial trade routes linking our vast continent to Singapore and Malaysia, we’ve long exchanged valuable goods and services with our neighbours to the north.

But the inking of AANZFTA a decade ago marked a new phase in our engagement with South East Asia – a renewed commitment from both sides. Since its inception, ASEAN has purchased A$350 billion in Australian exports. This equates to 10% of Australian goods exports, and 16% of Australian services exports.

In 2018, ASEAN was Australia’s third-largest trade partner. Member countries purchased A$52 billion in goods and services from Australia – more than the sum of our exports to the United States and South Korea.

A watching brief

Importantly, the AANZFTA agreement introduced regional rules of origin. These region-wide rules encourage Australian companies to be ambitious and consider the region as one turf for our economic activities. This resonates today, with 45% of Australian businesses saying ASEAN economic integration is important to doing business in the region. [1]

With a favourable demographic profile, encouragement of international trade and policy oriented towards the creation of a single market, ASEAN has developed into an attractive commercial partner. This stands out in today’s increasingly volatile trading environment.

Vital statistics

Today, 12,448 Australian goods exporters sell into ASEAN, which is more than those selling to the United States. In addition:

Almost one-third of Australian–ASEAN exporters sell to more than one ASEAN market

  • ASEAN is a leading destination for Australian direct investment, with Australian companies reporting A$40 billion of investment stock in 2018
  • ASEAN is Australia’s largest source of tourists with 1.44 million visiting our shores in 2018 – this roughly equals arrivals from China and exceeds arrivals from New Zealand [2]
  • The ASEAN region accounted for around 139,000 enrolments in Australian educational institutes in 2018, second behind China.

On the tenth anniversary of its signing, AANZFTA has proved itself to be a positive platform for regional engagement . As one of Australia’s most important trade agreements, it both reflects our history and charts a course for the future.

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[1] Greg Earl https://www.lowyinstitute.org/the-interpreter/economic-diplomacy-trade-and-traps-asean
[2] Source: Tourism Research Australia, International Visitor Survey 2019.