Lyla Lindsey
Australia's economy is heavily influenced by its trade partners, with Asia dominating its two-way trade flows. In 2018-19, China was Australia's top trading partner, followed by Japan, the United States, the Republic of Korea, Singapore, New Zealand, the United Kingdom, India, Malaysia, and Thailand. According to the Australian Bureau of Statistics, in 2024, India accounted for $35.5 billion, or a $0.5 billion (1.4%) increase in merchandise trade and services exports, making it one of Australia's top five trading partners.
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What You'll Learn
China is Australia's largest export market
China's role as Australia's largest export market was briefly interrupted in 2021 due to a series of export bans. During this time, Australia redirected its exports to other major Asian economies, including Japan, South Korea, and Taiwan. However, China's share of Australian exports began climbing again in early 2023, and by February of that year, it had returned to 36.7%.
The election of the Albanese Labor government in May 2022 contributed to the resumption of trade with China. The government's calmer rhetoric towards China provided an opportunity for Chinese authorities to start lifting export bans. Additionally, the removal of trade impediments worth $20 billion further strengthened Australia's trade relationship with China.
China's consumers now have access to a variety of Australian products, including live rock lobsters, wines, and high-quality beef steaks. This is advantageous for both Chinese consumers and Australian businesses, as it promotes economic growth and job creation in both countries.
In summary, China is Australia's largest export market, and the two countries share a significant economic relationship. Despite a brief period of tension, the election of the Albanese Labor government and the removal of trade impediments have contributed to the resumption and growth of trade between the two nations.
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The market share of other Asian markets is growing
Australia's exports to Asian markets have been steadily increasing, with the country's economic ties to the region growing stronger. In 2024, Australia recorded a surplus in its balance of goods and services, with exports falling by 4.5% to $644.4 billion. While the data does not provide a country-wise breakdown of exports, it is clear that Asian markets are significant contributors to this trade.
China, for instance, was Australia's largest export partner for education-related travel services, with a significant increase of $1,591 million (14.3%) to $12,710 million. This accounted for 24.7% of the total exports in this category. Additionally, China was also Australia's largest export partner for other personal travel services, with a notable rise of $1,092 million (91.5%) to $2,286 million, constituting 10.1% of the total.
India also played a substantial role in Australia's exports, with a rise of $1,014 million (12.7%) to $9,005 million. India was among the top five partner countries for merchandise trade and services exports, contributing to 60.4% of Australia's exports. Vietnam, another key Asian market, demonstrated impressive growth with an increase of $453 million (23.1%) to $2,416 million.
New Zealand, Australia's neighbour, also held a notable position in the country's exports. With a rise of $17 million (0.8%) to $2,196 million, New Zealand was Australia's second-largest export partner for other personal travel services, accounting for 9.7% of the total.
The strong growth in exports to these Asian markets underscores the increasing importance of the region in Australia's trade landscape. With its proximity to the Asia-Pacific region, Australia serves as a gateway to these thriving markets, offering a solid opportunity for global supply chain enrichment. The surge in foreign investment in Australia, particularly the rise in Foreign Direct Investment (FDI) by 9% in 2022, further highlights the confidence in the country's economy and its ability to buck global trends.
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Australia's exports to India rose by $1,014m (12.7%) to $9,005m
Australia's exports to India rose by $1,014 million (12.7%) to $9,005 million in 2024. This increase in exports to India contributed to a broader rise in Australia's exports of goods and services, which totalled $644.4 billion that year, a $30.4 billion (4.5%) increase.
India is one of Australia's top five partner countries for merchandise trade and services exports, along with China, Vietnam, New Zealand, and one other country. In 2024, India's merchandise trade and services exports rose by $1,014 million, or 12.7%, to reach a total of $9,005 million. This made India the second-largest source of export growth for Australia that year, after China, which saw a $1,591 million (14.3%) increase to $12,710 million.
India's strong performance as an export market for Australia is further highlighted when compared with other countries. For example, Vietnam's exports to Australia rose by $453 million (23.1%) to $2,416 million, while New Zealand's exports increased by a much smaller amount, at $17 million (0.8%) to $2,196 million.
The growth in exports to India is significant for Australia, as it diversifies its trade away from China, which has traditionally been its largest trading partner. India's increasing demand for Australian goods and services contributes to a more balanced and resilient trade landscape for Australia, reducing its economic dependence on a single market.
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Australia's exports to Vietnam rose by $453m (23.1%) to $2,416m
Australia's exports to Vietnam witnessed a significant surge, increasing by $453 million, which equates to a percentage growth of 23.1%. This boost in trade brings the total exports to Vietnam to $2,416 million. This notable increase underscores the strengthening economic ties between the two nations.
The rise in exports to Vietnam forms part of a broader context of Australia's international trade landscape. In 2024, Australia's exports underwent fluctuations, with total goods and services exports experiencing a decline of $30.4 billion, representing a 4.5% drop. However, services exports (credits) demonstrated resilience, recording a notable increase of $11.0 billion, or 9.6%, to reach $126.4 billion.
New South Wales and Victoria were the key drivers of services exports, collectively accounting for a substantial proportion, with 44.8% and 26.2% contributions, respectively. This dynamic duo of states played a pivotal role in bolstering Australia's international trade performance.
Among Australia's top trading partners, China stands out as the largest export partner for education-related travel services, with a substantial increase of $1,591 million, translating to 14.3% growth, and reaching a total of $12,710 million. India also emerged as a prominent player, with a notable rise of $1,014 million, or 12.7%, in exports, totalling $9,005 million.
It is worth noting that India's contribution to Australia's exports rose by $0.5 billion, or 1.4%, to reach $35.5 billion. Together with China and India, these five top trading partners, including Vietnam, accounted for a significant 60.4% of Australia's exports. This underscores the diverse and robust nature of Australia's international trade relationships.
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Australia's first free trade agreement was with New Zealand in 1983
Australia's first free trade agreement was with New Zealand, and it came into force on 1 January 1983. The treaty was signed on 28 March 1983 by the Deputy Prime Minister of Australia and Minister for Trade, Lionel Bowen, and the New Zealand High Commissioner to Australia, Laurie Francis, in Canberra, Australia. The agreement is officially known as the Australia-New Zealand Closer Economic Relations Trade Agreement, but it is commonly referred to as Closer Economic Relations (CER) or ANZCERTA.
ANZCERTA is one of the most comprehensive bilateral free trade agreements in existence. It covers a wide range of trade issues, including substantially all trans-Tasman trade in goods, such as agricultural products, and services. The agreement also covers investment from one country to the other, and Australia is the largest investor in New Zealand. ANZCERTA has been recognised by the World Trade Organization (WTO) as a model Free Trade Agreement.
The foundation of the ANZCERTA agreement was the earlier New Zealand Australia Free Trade Agreement (NAFTA), which was signed on 31 August 1965 and came into force on 1 January 1966. NAFTA led to the removal of tariffs and quantitative restrictions on 80% of trans-Tasman trade by the late 1970s. However, it was not structured to address the changing international economic environment and lacked an effective mechanism for removing remaining restrictions. As a result, Australia and New Zealand agreed to develop a more open bilateral trading system, which became ANZCERTA.
The two major sticking points in the negotiations for ANZCERTA were New Zealand's wish for better access for its dairy products in Australia and Australia's wish for New Zealand to remove export incentives and quantitative restrictions. These hurdles were overcome, and the Heads of Agreement was signed on 14 December 1982. One of the most important results of ANZCERTA was the Protocol on the Acceleration of Free Trade in Goods, which resulted in the total elimination of tariffs or quantitative restrictions between the two countries by 1 July 1990, five years ahead of schedule.
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