According to a recent HSBC report, Australia’s trade relationship with Asia is expected to surge in the coming years. China, Japan, and Korea already account for over 60% of Australia’s total exports, and by the year 2030, Asia’s share of Australia’s total exports is expected to exceed 80%. From 2007 to 2012, Australia’s total trade with Asia increased by 8% every year, reaching $340.2 billion by the end of that period. Merchandise exports to Asia have been concentrated in iron ore and coal while services exports have been in transport and travel.
US investment in Australian mining plays an important part of this relationship. In 2012, US direct investment in Australia reached $131 billion, 23.9% of Australia’s total FDI for that year and the highest out of all countries that invested. A large portion of this investment is allocated to the mining sector.
Dr. Craig Emerson, former Australian Minister for Trade and Competitiveness, attributes the deepening of the Australia-Asia relationship to the global shift towards Asia as an economic center as well as the growing consumer demand in many Asian countries. As Dr. Emerson stated, this is a “once-in-lifetime opportunity for Australian businesses to tap into immense new markets.”
Soon after HSBC released its report, Australia signed two monumental trade agreements with Korea and Japan. The Korea-Australia Free Trade Agreement (KAFTA) and the Japanese-Australia Economic Partnership Agreement (JAEPA) were signed on April 8 and July 8, respectively, and both agreements promise to be a boon to Australian businesses and exports.