Export activity in FTA markets

20 Dec 2017

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  • Divya Skene
  • AIBS 2017

This year the AIBS survey asked respondents about their export activities across the 16 markets with which Australia had a free trade agreement (FTA) in operation[1].

Around eighty-nine percent of the 941 internationally-active AIBS respondents to AIBS 2017 reported that they exported goods and/or services to FTA markets.

Of all the internationally-active businesses surveyed, 61 per cent are exporting goods to FTA markets and 66 per cent are exporting services to FTA markets.

  • Thirty-eight per cent are exporting both goods and services to FTA markets. Twenty-three per cent are selling only goods into FTA markets while 28 per cent are selling only services.

For our sample, the manufacturing industry has the largest share of both goods (46 per cent) and services (25 per cent) exporters to FTA markets.

The Professional, Scientific and Technical Services industry has a similar share of services exporters selling to FTA markets (24 per cent) but just seven per cent of the industry's respondents sell goods into FTA markets.

Agriculture, Fisheries and Forestry and Wholesale Trade are both equally ranked behind Manufacturing for their industry's share of goods exporters selling into FTA markets.

From a market perspective, we found ASEAN was the most popular FTA destination for AIBS exporters with 71 per cent of services exporters to FTA markets and over 66 per cent of goods exporters to FTA markets choosing to sell into the region.

China, the United States, New Zealand and Singapore each attract between 40-51 per cent of all AIBS exporters to FTA markets.

AIBS 2017 also looked at markets by industry, to find that for AIBS respondent firms, the ASEAN region is the top FTA market destination for all industries, except Agriculture, Forestry and Fishing and Wholesale Trade. For these two industries, China was ranked the most popular FTA market at the firm-level.

The AIBS survey also provided some insight on multi-(FTA)-country exporters to FTA markets.

Figure 4 shows

  • Goods exporters to the US are next most likely to sell to ASEAN, followed by New Zealand.
  • Goods exporters to China are next most likely to sell to ASEAN, followed by the United States.
  • However goods exporters to ASEAN are next most likely to sell to NZ than sell to the United States or China.

AIBS - profile of multi-country GOODS exporters

Although we don't know the detail of Australia's value chain links between ASEAN and the US or China, this finding suggests ASEAN is an important market to continue to develop in its own right, for AIBS firms looking to diversify away from the top two revenue markets, China and the United States.

  • Two-thirds of AIBS exporters to the US also sell to ASEAN, and two-thirds of AIBS exporters to China also sell to ASEAN – suggesting ASEAN is an important export destination for firms looking to diversify.
    (The recently published report ASEAN Now highlights opportunities that ASEAN holds for exporters).
  • Also of note, less than half of AIBS exporters selling to China also sell to the US (and vice versa).

AIBS - profile of multi-country services exporters

Services exporters to FTA markets show a similar pattern (Figure 5), although here there is a closer firm level link between services exporters to ASEAN, and China.

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[1]  The AIBS survey was in field between April-May 2017