Despite a close diplomatic relationship with the US, Australia does most of its trade closer to home. And WA follows suit, as Gary Kleyn reports.
WITH a gross domestic product of more than $US10,000 billion each year the United States economy dwarfs all others. It is three times the size of the world’s next largest economy, Japan, almost 10 times the size of that of the United Kingdom, France and Italy and 20 times larger than the Australian economy.
With this in mind, and given Australia’s close association with the US over the past 50 years, one could be forgiven for expecting that trade with the US would easily surpass trade with any other nation.
On the contrary, Australian exports to the US fall significantly behind other, smaller nations. It’s the same story for WA. The US is WA’s fourth largest trading partner, falling well short of trade with the largest exporting partner, Japan. Whereas Japan buys more than a quarter of WA’s total exports, North America, comprising the US and Canada, takes less than 8 per cent of WA exports, falling behind China and South Korea as an export destination. Exports from WA to the US in 2001-02 totalled $2.15 billion.
It’s a different story for imports. The US is WA’s main source of imports, supplying 13 per cent of total imported goods, or around $1 billion. Combined two-way trade between WA and the US totalled $3.19 billion, or about 10 per cent of Australia’s trade with the US.
Australia hardly registers as a trade destination for the US, however. Australia ranks as the 15th largest export destination for the US, taking 1.5 per cent of US exports, while Australia is the 28th largest import destination for the US, accounting for around 0.5 per cent of imports.
The Federal Government and the US Government believe a significant obstacle to improving trade between both countries is the presence of tariffs and other barriers. A report released last year by the Department of Foreign Affairs and Trade found removing trade barriers would increase trade by about $4 billion a year, or more than 10 per cent.
In November, Trade Minister Mark Vaile and the US Trade Representative Robert Zoellick announced that both countries were starting negotiations to conclude a Free Trade Agreement.
The Office of Trade Negotiations, operating out of the Department of Foreign Affairs and Trade, has a team working on the agreement.
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