Another Look at the Australia-US Free Trade Agreement (FTA)

In January we posted some info on the Australian’s position on the Australia-US Free Trade Agreement (FTA) on its 5th anniversary (click here for that story). Now we have another take on the FTA published in the Sydney Morning Herald (“Mind the Gap: Benefits from Free Trade Haven’t Really Gone the Distance”). While the earlier story focused more on what the US has done investment-wise into Australia as a result of the FTA, and the E-3 visa that allows Australians easier access to working in America than workers from most other countries, what has been the real upshot for Australian exports as a result of the FTA?

Rodney Tiffen, a professor of government and international relations at the University of Sydney goes so far as to call the agreement a “dud”. But while Australian exports to the US are meager, Aussie exports to Asian countries continues to grow.

Australia’s exports to the US in the five years to last year grew by only 2.5 per cent, compared with double-digit growth for exports to all the major Asian trading partners. Since the signing, America has slipped from third to fifth among Australian export destinations, overtaken by Korea and most recently India.

In general, it seems these FTA deals “favour…the biggest countries, such as the US and China. Their power affords them superior bargaining leverage to win concessions favouring their domestic constituencies. Australia and most other countries have an interest in more global agreements.”

Overall, however, the FTA has been a good thing for Australian entrepreneurs looking to set up business in the US. The E-3 visa allows for relatively easy relocation for those who are establishing a US entity while keeping parts of their business back home (typically R&D). In this scenario, both countries win. If anyone has any details on studies done that show where these US-based, Aussie-led companies exports go let us at ANZA TechNet know. The IT that is produced here by Australians that is sold to US customers is not considered “export” — or is it?

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