By Catherine Semmler
Trade between the US and Australia became easier and more beneficial after the Australia-US Free Trade Agreement (AUSFTA) came into force on January 1, 2005. This agreement benefits both Australia and the US by removing tariffs and opening markets.
The agreement was signed mid-2004 at the end of eleven months of negotiations between the two nations. It is the first trade agreement the US has entered into since 1988 and is Australia's first trade agreement with a major economy.
All 50 states in the US export to Australia, and Australia is in the top 25 export destinations for 48 out of the 50 states. Two-way annual goods and services trade with Australia is about $28 billion, and the US has a $9 billion trade surplus with Australia. With an open economy and business-friendly tax system, Australia is America's 9th largest goods export market. The Australian economy has consistently grown over the past fifteen years.
There are numerous advantages to doing business with Australia now that the agreement is in force. As of 1 January 2005, more than 99% of tariff lines covering industrial and consumer goods were eliminated. This elimination of tariffs will allow US suppliers to Australia to be more price-competitive than was previously possible through lower costs. This is the most significant reduction ever accomplished in a US free trade agreement. It is estimated by US manufacturers that the reduction in tariffs could increase US exports of manufactured goods to Australia by $2 billion per year. The US also exports more than $400 million of agricultural goods to Australia each year and those exports received immediate duty-free access.
The agreement also contains reductions of various non-tariff barriers such as improved quotas, easing of market restrictions and trade barriers, and the opening up of investment. More benefits are to evolve over time. US suppliers can now bid on Australian government contracts on a non-discriminatory basis.
The Australia-US Free Trade Agreement, along with Australia's familiar legal and corporate frame work now makes Australia a particularly attractive market to the US.
For more information, please contact Lee Hunter at lhunter@kmclaw.com.