Lexi Webster
Australia and the United States have a strong and cooperative trade relationship, which is facilitated by the Australia-United States Free Trade Agreement (AUSFTA). Since the agreement came into force in 2005, bilateral trade between the two countries has more than doubled, and two-way investment has tripled. The US is Australia's largest foreign investment destination, and the US is also the largest investor in Australia. The trade relationship is characterised by strong economic links, with Australian companies employing around 150,000 people in the US, and the US enjoying a large trade surplus with Australia.
| Characteristics | Values |
|---|---|
| Trade agreement | Australia-United States Free Trade Agreement (AUSFTA) |
| Date of enforcement | 1 January 2005 |
| Two-way trade | Increased by 138% since AUSFTA |
| US-Australia trade in 2023 | $98.7 billion |
| US exports to Australia in 2024 | $34.6 billion |
| US imports from Australia in 2024 | $16.7 billion |
| US investment in Australia in 2023 | $1.17 trillion |
| Australian investment in the US in 2023 | $1.20 trillion |
| US exports to Australia | Financial services, travel services, telecoms/computer/information services, royalties, trucks, processed foods, fruits and vegetables, corn, soybeans |
| Australian exports to the US | Financial services, gold, sheep/goat meat, transportation services, vaccines |
| Australian companies in the US | Employ approximately 150,000 people |
| Australian companies in California | Operate in 83 different industries |
| Tariffs eliminated | On more than 99% of the tariff lines for qualifying US manufactured goods exported to Australia |
| Australian companies' access to | US federal government procurement market (valued at US$637 billion) and government procurement markets of 31 US states |
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What You'll Learn
The United States-Australia Free Trade Agreement (FTA)
Under the AUSFTA, tariffs that averaged 4.3% were eliminated on more than 99% of the tariff lines for qualifying US manufactured goods exported to Australia. Similarly, over 97% of Australia's non-agricultural exports to the US are now duty-free, and three-quarters of agricultural tariff lines have been eliminated. This has resulted in a significant expansion of trade in goods and services and foreign direct investment between the two countries.
The AUSFTA has also opened markets for services such as life insurance and express delivery, improved protection of intellectual property, and facilitated American investments through predictable access and a stable business environment. Australian companies now have access to the US federal government procurement market, valued at US$637 billion, and the government procurement markets of 31 US states.
The FTA has also made advances in e-commerce and market access for pharmaceuticals. For the first time, American firms are allowed to compete for Australia's government purchases on a nondiscriminatory basis. US farm exports benefit from duty-free treatment, and US exports of consumer and industrial goods to Australia are also mostly duty-free.
Since the implementation of the AUSFTA, two-way trade between the US and Australia has grown significantly, with bilateral goods and services trade more than doubling and two-way investment tripling. In 2023, the US was Australia's third-largest two-way trading partner in goods and services, worth $98.7 billion. The US is also Australia's largest investor and its largest foreign investment destination.
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Bilateral goods and services trade
The United States and Australia have a close and cooperative trade relationship, facilitated by the Australia-United States Free Trade Agreement (AUSFTA) which came into force on 1 January 2005. The AUSFTA has had a significant impact on bilateral goods and services trade between the two countries, with two-way trade growing from US$32 billion to US$77 billion since its implementation.
Under the AUSFTA, more than 99% of U.S. exports of consumer and industrial goods to Australia are now duty-free, and over 97% of Australia's non-agricultural exports to the U.S. (excluding textiles and clothing) are also duty-free. This has resulted in expanded trade in goods and services and increased foreign direct investment. The AUSFTA has also opened markets for services such as life insurance and express delivery, improved protection of intellectual property, and facilitated American investments through predictable access and a stable business environment.
In 2023, the United States was Australia's third-largest two-way trading partner in goods and services, with total trade worth $98.7 billion. Australia's goods and services exports to the United States were $33.6 billion, while imports from the United States totalled $65.1 billion. U.S. goods trade with Australia continued to grow in 2024, with exports to Australia reaching $34.6 billion and imports from Australia totalling $16.7 billion.
The United States is the largest and most significant investor in Australia, with investment in Australia standing at $929 billion in 2020 and $1.17 trillion in 2023. Australia's largest exports to the U.S. include financial services, gold, sheep/goat meat, transportation services, and vaccines. Notable Australian investors in the U.S. include Woodside, Westfield, Brambles, Atlassian, Worley, Visy, Bluestone Lane, Rio Tinto, and Tritium.
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Australia's highly skilled workforce
Australia's highly skilled, multilingual, and diverse workforce is a key factor in its economic success and makes it an attractive place for foreign investment. Ranked in the global top five on the Index of Economic Freedom, Australia's effective governance provides a safe and secure business environment for multinational enterprises.
The Australian government encourages Australian companies operating abroad to follow the OECD Guidelines for Multinational Enterprises, which provide standards for responsible business conduct. This includes the resolution of issues through the Australian National Contact Point (AusNCP), which facilitates access to conciliation services.
To address skill shortages, Australia has implemented initiatives such as the Skilled Migration List and the Skilled Occupation List (SOL), which outline occupations in high demand and facilitate skilled migration. The Australian Bureau of Statistics (ABS) classifies occupations according to five skill levels, with Skill Level 1 requiring a Bachelor's degree or higher qualification.
The Australian labour market has identified sectors with high job demand, including healthcare, social assistance, professional services, and technical services. The COVID-19 pandemic impacted the economy, leading the government to announce critical skills needs and offering priority processing for specific occupations.
Australia's strong institutions, exceptional services sector, and ability to respond to global change contribute to its economic resilience and attractiveness for trade and investment with the United States.
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US foreign direct investment
The United States is Australia's most valuable economic partner, with US direct investment in Australia being higher than in any other country in the Indo-Pacific region. The stock of US direct investment in Australia totals approximately A$195 billion, and it has been growing by more than A$10 billion per year in recent years. US-sourced portfolio investment was valued at A$522 billion in 2016.
US capital markets, especially debt markets, are a vital source of capital for Australian companies, particularly in the banking and financial services sectors. Australia's "Big 4" banks are heavily reliant on wholesale funding from US debt markets, which has positive spillovers for their ability to lend to Australian individuals and businesses.
The United States and Australia have a close and cooperative trade relationship, underpinned by the US-Australia Free Trade Agreement (FTA), which came into effect in 2005. Since then, two-way trade has grown by 138%, from US$32 billion to US$77 billion. Over 12,000 Australian companies export to the United States, and Australian companies employ approximately 150,000 people in the US.
Australia's highly skilled and multilingual workforce, robust economy, trusted legal system, and stable society make it an attractive place for US investment. The country also has a strong R&D ecosystem and government support, making it a compelling destination for investors and innovators in agrifood technology.
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Benefits for American firms
The United States and Australia have a mutually beneficial trade relationship, as evidenced by the growth in two-way trade since the implementation of the Australia-United States Free Trade Agreement (AUSFTA) in 2005. This agreement has opened up several sectors for American firms to explore and invest in.
One of the key benefits for American firms is the access to Australia's robust and diverse economy. Australia is the world's 13th largest economy, boasting a highly skilled, multilingual workforce, strong institutions, and an exceptional services sector. This provides American companies with a wide range of opportunities across various industries. For example, in California alone, Australian companies operate in 83 different sectors, employing approximately 19,000 people.
The AUSFTA has also eliminated tariffs on over 99% of US exports of consumer and industrial goods to Australia, making it more attractive for American firms to do business in the country. Additionally, American firms can now compete for Australia's government purchases on a nondiscriminatory basis, providing them with access to the federal government procurement market, valued at US$637 billion, and the government procurement markets of 31 US states.
Furthermore, the agreement has facilitated American investments in Australia by providing a stable and predictable business environment. The US is the largest and most significant investor in Australia, with investments totalling $929 billion in 2020 and reaching $1.17 trillion in 2023. This demonstrates the confidence American firms have in Australia as an investment destination.
Finally, the close cooperation between the two countries in global and regional trade organizations, such as the World Trade Organization (WTO) and the Asia-Pacific Economic Cooperation (APEC) forum, provides American firms with a secure and supportive framework for doing business in Australia.
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Frequently asked questions
The two countries have a close and cooperative trade relationship, underpinned by the Australia-United States Free Trade Agreement (AUSFTA).
The AUSFTA came into force on 1 January 2005. It eliminated tariffs on more than 99% of the tariff lines for US manufactured goods exported to Australia. It also opened markets for services such as life insurance and express delivery, improved intellectual property protection, and facilitated American investments.
Australia has access to the US federal government procurement market, valued at US$637 billion, and the government procurement markets of 31 US states. Australian companies in 83 different industries operate in California alone.
Over 12,000 Australian companies export to the United States, and Australian companies employ approximately 150,000 people in the US. US trade with Australia has also grown by 138% since the AUSFTA came into force.
Notable Australian investors in the US include Woodside, Westfield, Brambles, Atlassian, Worley, Visy, Bluestone Lane, Rio Tinto, and Tritium.
