Australia-United States FTA (AUSFTA) Anniversary
Australia's Foreign Minister Marise Payne and Defence Minister Linda Reynolds have arrived in the United States for crucial AUSMIN talks on Wednesday.
"This visit is a testament to the importance of our enduring Alliance," Ms Reynolds tweeted. The ministers plan to agree on several measures including
to boost health security in the Indo-Pacific and help the region recover from the coronavirus crisis.
This Alliance goes back many, many years over numerous different aspects of co-operation. At the governmental level, Australia–United States relations are formalised by the ANZUS treaty. At the trade level, Australia–United States Free Trade Agreement (AUSFTA) is celebrating its 15 year anniversary in 2020.
AUSFTA was Australia’s first free trade agreement with a major economy and was the first trade agreement that the United States had entered into in over 15 years.
When the free trade agreement between the United States and Australia came into force on 1 January 2005, the two allies were engaged in the wars in Afghanistan and Iraq, economic globalisation was yet to reach its high watermark, and China’s economy was less than a sixth of the size that it is today.
AUSFTA deepened the Australia-United States economic relationship, with two-way trade increasing by nearly 80 per cent and investment flows nearly tripling since 2005. As a result of the FTA, tariffs were eliminated on more than 99 per cent of the tariff lines for qualifying Australian manufactured goods exported to the United States. In addition to tariff elimination, the FTA affords substantial benefits in a broad range of other sectors.
Most goods imported into the United States under the AUSFTA are free of duty and merchandise processing fee (MPF). All AUSFTA goods will be duty-free on 1 January 2022. Australia exports foods, feed, and beverages; industrial supplies and materials; and business and travel services.
Australia has also proven to be an appealing and profitable market for the United States companies for many years. Australia offers very few barriers to entry, a familiar legal and corporate framework, and a sophisticated yet straightforward business culture.
The United States is the largest and most significant investor in Australia, accounting for 27 per cent ($939 billion) of Australia's total foreign investment stock as of December 2018. The United States is also by far Australia's largest foreign investment destination, accounting for 28 per cent (or $719 billion) of Australia's total overseas investment stock as of December 2018. Two-way investment has almost tripled since the Agreement came into force.
But much has changed since 2005, with globalisation in retreat and China the second-largest economy in the world. In an era of economic uncertainty and US-China strategic competition, we should take a moment to celebrate the 15 year anniversary of the AUSFTA and continue to maintain and build on the trade relationship between Australia and the United States.