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What you need to know
China remains Australia’s number one trading partner, there are very early indications the diplomatic relationship could be improving.
New Trade Minister Don Farrell and his deputy Tim Ayres are taking an active role in the region as part of Labor’s Trade Diversification strategy.
Iron ores remain Australia’s number one export, a fiscal advantage given high global commodity prices.
It remains to be seen whether the new Labor government will ratify Australia’s new free trade agreements with the United Kingdom and India this year.
Australia’s top trading partners (2019-20)
Australia’s top goods and services exports/imports (2019-20)
Iron ores - 21.6%
Coal - 11.5%
Natural gas - 10%
Education - 8.3%
Gold - 5.1%
Personal travel - 3.4%
Beef - 2.4%
Aluminium - 1.9%
Crude petroleum - 1.8%
Copper ores - 1.4%
Personal travel - 8.4%
Refined petroleum - 5.5%
Motor vehicles - 4.8%
Telecom equipment - 3.8%
Computers - 2.6%
Freight services - 2.6%
Crude petroleum - 2.4%
Gold - 2.2%
Professional services - 2.1%
Medicaments - 2%
Source: Department of Foreign Affairs and Trade
During the 2022 federal election campaign, Labor tabled its Trade Diversification Plan aimed at diversifying the markets Australia trades with, largely due to the strained relationship with China.
This plan includes four pillars:
1. Export market and product diversification strategy
Re-engaging with the Indo-Pacific region, early ministerial visits to key partners, identifying emerging export markets.
2. A focus on building economic ties with India
Supporting India’s membership of APEC and the Regional Comprehensive Economic Partnership, if it wishes to join.
3. Revitalising our trade relationship with Indonesia
Seeking an annual economic 2+2 dialogue between the trade ministers and treasurers of both countries.
4. Regional trade co-operation
Supporting the accession of Indonesia, Thailand, and South Korea to the CPTPP.
Early trade policy from the Labor government appears to be following this plan. Albanese, Wong, Farrell, and Ayres have visited a number of key trading partners (including but not limited to the USA, Vietnam, Cambodia, UK, and Japan).
Despite the diversification policy, since taking office, the new government has put considerable effort into repairing the relationship with China (they remain our number one trading partner).
In 2020, China imposed import tariffs of 80% on Australian barley, 116-214% on Australian wine, and restricted the purchasing of Australian beef, coal, and grapes. The move has been labelled by the USA as “economic coercion”. However, China claims the measures are anti-dumping. Australia is continuing with a number of trade dispute complaints to the World Trade Organisation against China as a result of these actions.
Minister for Foreign Affairs Penny Wong has met with her Chinese counterpart Wang Yi twice, once on July 8 on the sidelines of the G20 Foreign Ministers’ Meeting in Bali (marking the highest level meeting between the two countries in three years), and second on September 22 on the sidelines of the United Nations General Assembly in New York.
Following both meetings each leader acknowledged the tensions between the countries and expressed a desire for them to be repaired. In New York, Wang stated that the “Chinese side is willing to properly resolve differences and promote the healthy and stable development of bilateral relations,” going on to say that “the two sides should meet each other halfway”. This marks a considerable improvement in Chinese diplomatic dialogue towards Australia.
It is worth noting that this comes as the Chinese Yuan hits a record low against the US dollar even though the Chinese trade surplus is set to top $1 trillion USD this year, the highest surplus of any country in history. Despite this, China continues to have a large trade deficit with Australia.
Before the 2021 Labor National Conference (where the party’s 2022 election policies were voted on and set), a motion supported by the Electrical Trades Union and the Australian Manufacturing Workers’ Union tried to bind the parliamentary party to voting against free trade agreements that had not been negotiated by Labor. The unions feared these agreements were not always aligned with workers’ interests. While this motion did not pass, it must be noted that Labor will face increasing pressure from unions when negotiating new free trade agreements.
Environmental Goods Agreement (EGA)
The EGA is an attempt by some members of the WTO to reduce tariffs on goods that benefit the environment. The EGA remains under negotiation and is chaired by the Australian Government.
Australia has bilateral free trade agreements with the following countries:
China (ChAFTA since 2015)
Hong Kong (A-HKFTA since 2020)
India (AI-ECTA since 2022 yet to be ratified)
Indonesia (IA-CEPA since 2020)
Japan (JAEPA since 2015)
Malaysia (MAFTA since 2013)
New Zealand (CER since 1983)
Singapore (SAFTA since 2003)
South Korea (KAFTA since 2014)
Thailand (TAFTA since 2005)
Peru (PAFTA since 2020)
Chile (ACI-FTA since 2009)
United States of America (AUSFTA since 2005)
United Kingdom (A-UKFTA since 2022 yet to be ratified)
Australia has free trade agreements with the following countries through trading bloc free trade agreements (Australia/NZ + ASEAN, RCEP, CPTPP):
Australia is currently negotiating free trade agreements with the following countries/trading blocs:
Gulf Cooperation Council (UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, Oman)
United Arab Emirates (UAE)
Foreign Investment Review Board (FIRB) approval thresholds. Foreign investments exceeding certain thresholds are subject to FIRB approval, the below chart explains these thresholds:
Senator Don Farrell - Minister for Trade and Tourism
67 year old Farrell is known as the godfather of Labor Right factional politics, acting as somewhat of a powerbroker. Farrell was South Australian Secretary and National President of the SDA. Farrell obtained a Bachelor of Laws from the University of Adelaide. In 1988 he ran unsuccessfully for the Federal division of Adelaide. Farrell was successfully elected to the Senate in 2007 as number one on Labor’s South Australian ticket. Controversy erupted when Farrell retained the number one spot ahead of Penny Wong for the 2013 election. Anthony Albanese was scathing in his criticism, Farrell eventually stepped aside to second spot and was defeated. He returned to the Senate in 2016 after a brief flirt with South Australian state politics. He served as Minister for Sport in the second Rudd government. Farrell lives on a vineyard in the Clare Valley with his wife Nimfa and three daughters. Farrell abstained from the vote on same-sex marriage.
Senator Tim Ayres - Assistant Minister for Trade
Elected to parliament in 2019 as a Senator for New South Wales, Ayres studied industrial relations at the University of Sydney. Ayres went on to become the State Secretary for the Australian Manufacturing Workers Union (AMWU), a body that has been critical of recently signed free trade agreements.
Kevin Hogan MP - Shadow Minister for Trade and Tourism
Nationals MP for the New South Wales seat of Page, Hogan studied a Bachelor of Economics at Flinders University. Hogan held roles in finance and superannuation before entering parliament in 2013. Hogan has been critical of leadership instability in the Liberal National Party, moving to the cross bench in 2018 following Scott Morrison’s successful ousting of Prime Minister Malcolm Turnbull. Hogan was promoted to Assistant Minister to the Prime Minister in 2020, he has also served as Deputy Speaker.
Joint Standing Committee on Foreign Affairs, Defence and Trade
Chair - Hon Shayne Neumann MP (ALP)
Deputy Chair - Senator David Fawcett (LP)
Members of Trade Subcommittee - Senator Deborah O'Neill (Chair); Hon Michael McCormack MP (Deputy Chair); Senator Ralph Babet; Mr Colin Boyce MP; Senator Raff Ciccone; Senator the Hon David Fawcett (ex-officio); Mr Steve Georganas MP; Mr Luke Gosling OAM MP; Mr Julian Hill MP; Senator Jim Molan AO DSC; Hon Shayne Neumann MP (ex-officio); Mr Graham Perrett MP; Hon Melissa Price MP; Senator Tony Sheldon; Senator Dean Smith; Ms Susan Templeman MP; Ms Maria Vamvakinou MP; Mr Josh Wilson MP; Mr Terry Young MP.
Joint Standing Committee on Treaties (JSCOT)
Must approve all new free trade agreements under Labor’s binding National Platform.
Chair - Hon Josh Wilson MP (ALP)
Deputy Chair - Hon Phillip Thompson OAM MP (LNP)
Members - Hon Sam Birrell MP; Hon Matt Burnell MP; Senator Matthew Canavan; Senator Claire Chandler; Hon Andrew Charlton MP; Lisa Chesters MP; Senator Dorinda Cox; Senator Nita Green; Hon David Mulino MP; Senator Deborah O’Neill; Hon Henry Pike MP; Senator Marielle Smith; Hon Kate Thwaites MP; Senator David Van.
World Trade Organisation (WTO)
The WTO sets the global rules of trade, its two main purposes are to firstly encourage free, smooth, and predictable trade. Secondly, it acts as a forum to settle trade disputes. All but 14 countries are WTO members. They are Aruba, Eritrea, Kiribati, Kosovo, Marshall Islands, Micronesia, Monaco, Nauru, North Korea, Palau, the Palestinian Territories, San Marino, Sint Maarten, and Tuvalu.
Australian Trade and Investment Commission (Austrade)
The Australian government agency responsible for trade promotion and tourism globally. Austrade falls under the umbrella of the Department of Foreign Affairs and Trade (DFAT) Austrade has a number of trade representatives located across the world see: https://www.austrade.gov.au/about/austrade-representatives#U
AusTrade representatives often work out of Australian embassies. Australian businesses will reach out to embassies in relevant countries for trade enquiries.
New South Wales investment attraction agency
Victoria investment attraction agency
Invest & Trade WA
WA investment attraction agency
AmCham (American Chamber of Commerce In Australia)
Chamber of commerce
Australian British Chamber of Commerce
Chamber of commerce
European Australian Business Council
Chamber of commerce
Japan Chamber of Commerce and Industry
Chamber of commerce
Australia Israel Chamber of Commerce
Chamber of commerce
Economic and trade forum/event to promote Australian/USA relations
Australian population living overseas
The number of Australians in the following countries:
United Kingdom - 165,000 (2021)
United States - 98,969 (2019)
New Zealand - 75,696 (2018)
Canada - 21,115 (2016)
South Korea - 15,222 (2019)
Hong Kong - 14,669 (2016)
Germany - 13,600 (2020)
Mainland China - 13,286 (2010)
Japan - 12,024 (2019)
The number of people born overseas living in Australia:
England - 967,390
India - 710,380
China - 595,630
New Zealand - 559,980
Philippines - 310,620
Vietnam - 268,170
South Africa - 201,930
Malaysia - 172,250
Italy - 171,520
Sri Lanka - 145,790
Scotland - 130,060
Nepal - 129,870
United States - 109,450
Germany - 107,940
South Korea - 106,560
Hong Kong - 104,990
Greece - 100,650
Source: 2021 ABS Census
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