Trade and Investment
2020 marked the 15th Anniversary of the Australia United States Free Trade Agreement (AUSFTA). 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.
MATES IN BUSINESS: AUSFTA 2005-2020 AND BEYOND
This year marks the 15th Anniversary of the Australia United States Free Trade Agreement (AUSFTA). 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.
Since its inception, AUSFTA has generated immense benefits for Americans and Australians and further strengthened the core economic, cultural and national security relationship between our two nations. Our shared values, similar legal institutions and cultural affinity make Australia and the United States great partners - mates – in business.
USA = AUSTRALIA’S LARGEST ECONOMIC PARTNER
The United States is Australia’s most important economic partner. The economic relationship with the US is more important to Australia than any other, eclipsing China, the United Kingdom or New Zealand.
In 2019, the United States’ US$28 billion trade surplus with Australia was its third largest, despite Australia’s mid-size economy. The United States has run a healthy trade surplus with Australia every year since 1952.
Australian trade and investment with the United States supports US jobs, fuels innovation and further connects the American and Australia peoples – as partners; as mates.
AUSFTA – and the economic relationship it underpins – represents one of the finest examples of Mateship between Australia and the United States.
AUSTRALIANS LOVE AMERICAN PRODUCTS
Since AUSFTA came into force in 2005, US exports to Australia have grown 130 per cent. Two-way trade between the US and Australia – which is the sum of US exports to, and imports from Australia – has more than doubled to over US$67 billion (2019 figures).
This relationship has generated significant income for US companies, jobs for American workers and stimulus to the US economy. Consumers in both countries enjoy more choice and lower prices, thanks to AUSFTA.
Australian companies (US companies with Australian parent businesses) directly employ over 150,000 people in the United States. These are overwhelmingly high quality, well paid jobs, with average compensation paid by Australian companies to US workers of more than US$92,000 (significantly higher than average compensation in the United States of US$65,158).
In addition, trade with Australia supports approximately 300,000 jobs in the United States, with particular concentration in the manufacturing and tourism sectors. Over 94 percent of US goods exported to Australia are manufactured goods. However, in ordinary times the single biggest export is travel services. Australians love visiting the United States. In 2019, 1.3 million Australian tourists visited the United States – that’s more than 5 percent of the entire population – spending an extraordinary US$7.5 billion on hotels, restaurants, shopping and attractions, and supporting thousands of service jobs across the United States.
Over 94 percent of US goods exports to Australia are manufactured goods.
Australians directly support key US manufacturing sectors, businesses and jobs, including the motor vehicle sector (Ford, Jeep), the aircraft industry (Boeing, United Technologies), telecommunications businesses (Cisco, Qualcomm, Motorola), and pharmaceutical companies (Pfizer, Merck).
However, in ordinary times the single biggest export is travel services. Australians love visiting the United States. In 2019, 1.3 million Australian tourists visited the United States – that’s over 5 percent of the entire population – spending an extraordinary US$7.5 billion on hotels, restaurants, shopping and attractions.
INVESTMENT BETWEEN AUSTRALIA AND THE UNITED STATES HAS NEARLY TRIPLED
The United States is without a doubt Australia’s most important investment partner. It is by far the largest destination for Australian foreign investment. In 2018 Australia had over US$537 billion invested in the United States. Great Australian companies, including Bluescope, Rio Tinto, CSL, Atlassian, Brambles, Lendlease, Transurban and Pratt Industries, continue to create US jobs, spur innovation and support communities across the country.
Australian companies directly employed 83,700 American workers at the end of 2017.
In addition, the United States is the largest foreign investor in Australia by a long shot. In 2018, US companies and individuals had invested over US$700 billion in Australia, dwarfing investment made by our second biggest investor, the United Kingdom. Great US companies operating in Australia support Australian and American jobs, provide a flow of innovation and ideas between our borders and generate products and choice that most Australians take for granted.
Since AUSFTA came into force, two way investment between Australia and the US has increased more than 150 per cent. Australians continue to invest significant funds in US businesses and industries, and Americans continue to invest at record levels in Australia.
MATES IN INNOVATION AND COLLABORATION
AUSFTA has promoted innovation in both the United States and Australia by enshrining strong protections for intellectual property and cross-border investments, securing ongoing access to each other’s services markets and guaranteeing open trade settings that facilitate cross-border supply chains.
Australia is ranked first for technological readiness as a nation of inventors and entrepreneurs. The electronic pacemaker (1926), the ‘black box’ flight recorder (1958), ultrasound (1961), multi-channel cochlear implants (1970s), wi-fi (1990s), the polymer banknote (1988), Google Maps (2003) and a cervical cancer vaccine (2006) are all Australian innovations.
AUSTRALIA'S INNOVATION CREDENTIALS
The unrivaled Australian and US economic relationship, underpinned by AUSFTA and strengthened by our common values and similar institutions, has led to great new innovations and collaborations between US and Australian companies, research institutions and governments.
The Ford Ranger provides a great example. Ford employs hundreds of engineers, and designers in Australia – they design the highly popular Ford Ranger (a “ute” or pickup truck).
The Ford Ranger is then built in a range of faciliites, including Michigan (USA), Thailand and Argentina, and distributed worldwide, including to Australia.
Another example which underpins the close cooperation is that of Google Maps. Google Maps was a startup in Australia in 2004 when it was bought and purchased by Google.
It and AUSFTA have been going for 15 years and it highlights what trade in services and investment links can achieve.
Recently, Australian-based company Lendlease Americas has stepped up its efforts to use its expertise and know-how to respond to the COVID-19 pandemic.
Through its construction arm, over the last month it has delivered COVID-19 preparedness across New York City Hospitals, including:
Lagone Medical Center – converted non-clinical space into COVID-19 testing sites
Kimmell Emergency Department – expansion of facilities
Memorial Sloan Kettering Cancer Center – mobilising screening trailers for regional areas
NY Presbyterian Hospital Uptown – converting bed units, building a Riverview terrace field hospital and installing temporary bed pods, and exhaust fan roof install for patient wings and an N95 Co2 steriliser
NY Presbyterian Hospital Downtown – converting bed units and retrofitting space for temporary morgue facilities
NY Presbyterian Hospital Brooklyn Methodist – converting bed units, retrofitting space for temporary morgue facilities, and providing new power upgrades for additional exhaust
Sanofi Pasteur – building a new filling inspection facility
It has also working with the US Army to provide immediate lodging solutions for National Guard mobilisation, the surge of additional medical personnel, and the accommodation of personnel displaced by the repurposing of barracks for alternative use. In addition, Lendlease offered all military families access to over 12,000 hotel rooms nationwide, at rates less than per diem amid the COVID-19 pandemic.
LOOKING TO THE FUTURE: TRADE AND INVESTMENT OPPORTUNITIES WITH AUSTRALIA
There are significant opportunities for US companies looking to trade with or invest in Australia across a number of priority sectors and industries. These include the following:
ENERGY AND RESOURCES
Australia’s energy and resources sector is the nation’s leading destination for foreign direct investment and provides significant opportunities for US companies seeking to invest in Australia.
With critical financial, regulatory and market support from the Australian Government, research and development (R&D) takes place across a number of key areas in the energy and resource sectors. The intense collaboration between advanced scientific research organisations, local industry, and global energy and resources companies makes Australia a site of significant innovation in the areas of energy and resources.
For example, Australian mining R&D has resulted in breakthroughs across multiple mining and exploration sectors. Successful R&D fields including geophysics and geoscience, surface and underground mining, coal and mineral processing, materials handling, and transport and logistics. Australia is now a clear world leader in mine automation research and development.
Another example lies in the numerous partnering opportunities available in mining equipment, technology and services across all resources sub-sectors, especially 3D modelling software, safety and data integration. Specific success stories include:
MICROMINE – a software company which has created industry-leading applications for 3D modelling, data integration and fleet vehicle management.
ORICA – one of the world’s leading providers of commercial explosives and blasting systems, including technologies to enhance efficiency and safety.
DEFENCE, ADVANCE MANUFACTURING AND SPACE
Australia’s defence, advanced manufacturing and space sectors reflect a sophisticated Industry 4.0 ecosystem in which automation and robotics, cyber, advanced materials, additive manufacturing, Internet of Things, big data, AI and immersive technologies all contribute to an environment where investment and trade opportunities thrive.
There are countless investment opportunities in research, and Australia welcomes US companies seeking to conduct research and development in these areas.
Australia’s CEAFAR radar – this was developed by Australia-based CEA Technologies and is widely recognised as one of the world’s most capable active phased-array naval radars. It was developed through collaborative efforts between the United States Department of Defence and Australian companies.
Electro-optical specialist EOS – leverages research centres in Australia and manufacturing capabilities in the United States to create lasers, software, electronics, optronics, gimbals and beam-directors used in mobile weapons stations.
F-35 combat aircraft program – Australian companies’ expertise in advanced materials have also led to many successful Australian-US collaborations. More than 17 Australian companies manufacture parts for the F-35 combat aircraft program, for example Lovitt Technologies and Marand.
Australia offers compelling opportunities in digital technologies for American investors and collaborators. Its expertise in financial technology, big data, AI and blockchain, enterprise solutions, digital games, cyber security and immersive media (including augmented reality/VR), quantum computing and advanced autonomous systems makes it a highly attractive destination for American investment and trade.
Cylance – an American IT security company which has opened an office in Australia to service the Asian market.
IBM Research Australia – one of IBM’s 12 global research labs and the largest industrial research lab in Australia. Opened in Melbourne in 2011, the lab combines research and development to innovate and apply AI to solve real-life business problems and challenges.
AGRIBUSINESS AND FOOD
Australia is a primed for greater United States investment and trade in agribusiness, aquaculture, intensive horticulture and food.
Its diverse soil types and climactic zones, high-quality raw materials and robust infrastructure and production systems has made Australia one of the world’s leading agricultural producers. Opportunities abound for more capital investment from US sources in areas such as food processing and manufacturing facilities to service export markets, agrifood technology solutions, agtech and foodtech startups and partnerships for strategic agrifood innovation.
Australian farmers and food manufacturers have a long history of adopting new technologies, so US companies will also find a ready market for their solutions in Australia. SwarmFarm’s robotic agriculture is an example of leading Australian innovations empowering farmers to deploy new technologies in their fields and PhycoFood Co is a rapidly growing business which is manufacturing fortified functional foods from Australia’s first food-grade seaweed farm.
The country is both a source of innovative agtech and a market actively seeking new solutions developed overseas. Australian agtech is often developed by farmers and producers themselves, or in collaboration with Australian research institutions and international partners.
Australia is a fertile market for research, investment and product development in the biotechnology, pharmaceuticals, medical devices and digital health industries.
Australia’s biotech and medtech sectors are especially vibrant. US companies seeking to innovate in healthcare products often turn to Australia because the healthcare system is receptive to innovation, research is well funded, and a strong regulatory system protects intellectual property.
Recognised as a pioneer in the global health industry, Australian medical researchers and entrepreneurs have made a vital contribution to medical science. For example, globally significant research breakthroughs such as spray-on skin for burns treatment, the Cochlear implant (bionic ear), a cure for peptic ulcers, the invention of a foetal ultrasound, and Gardasil (the world’s first cervical cancer vaccine) all come from Australia. Other examples include:
Canadian intelligent-dermatology start-up MetaOptima chose Australia as its first international market for AI-assisted technology that detects melanoma due to Australia’s world-class melanoma research and passion for medical innovation.
Australian company Anatomics has become the first company in the world to develop an interface between a CT scanner and a 3D printer to create customised medical devices.
INFRASTRUCTURE AND CITIES
Infrastructure is one of the major sectors in the Australian economy that provides rich opportunities for US companies considering financing, constructing, owning or operating major civic and transport infrastructure assets. There is a wide array of investment opportunities in road, rail, seaports, airports, energy, water and social infrastructure.
Beyond 2020, a significant pipeline of public sector–backed projects are being brought to market, with the majority of these projects involving transport infrastructure in large cities. This is creating opportunities for US companies with particular experience in complex engineering and construction projects.
Australia is also seeking new and future transport technology and services to address increasing urbanisation, rapid population growth and environmental sustainability. It is already home to a large number of future transport innovators that can provide expertise and solutions to international transport authorities, including Baraja, which has developed a 3D machine vision system for connected and automated vehicles, and Tritium, which is manufacturing world-leading electric vehicle charging infrastructure.
International education is one of Australia’s largest and most vibrant industries with more than 700,000 international students from 160 countries studying in Australia in 2019.
The segments of the Australian international education sector with the greatest opportunities for US collaboration reflect the industries where Australia has a global competitive advantage, including training and education related to mining and energy, tourism and hospitality, healthcare and aged care, and the integration of science, technology and agriculture.
Australia is also well known for its innovations in education: universities, startups, and private and public companies all develop edtech solutions and training programs. For example:
the University of Tasmania’s Wicking Dementia Research and Education Centre has delivered free online dementia training that has been recognised as one of the world’s all-time top 50 online courses. Over 300,000 people from more than 200 countries have enrolled in the Centre’s Massive Online Open Course (MOOC). The Class Central rated the dementia course as the most popular MOOC in the health and medical category.
Canberra-based Eggler Technology Training specialises in the training aspects of military technology and defence-related systems engineering and has delivered professional development training programs to over 1,000 students in defence organisations and private companies. In 2019, Eggler secured a professional development training contract with the United States Marine Corps to deliver training in the technical issues associated with the design and specifications of modern armoured and logistics vehicles.
TOURISM AND REGIONAL INVESTMENT
As the seventh largest tourism market in the world, Australia is a major destination for tourism and regional investment and offers a stable environment for investments in tourism infrastructure and services, especially catering to the Asian market.
The growth in regional tourism in Australia is particularly strong and presents strong investment opportunities for US investors.
Australia possesses deep expertise to help international markets develop. Australian firms have extensive experience in developing and delivering travel and tour products and experiences, hotels, and supporting products that feed into global tourism supply chains, including the delivery of tech solutions and construction of enabling tourism assets and infrastructure.
Through supporting individuals, families, businesses and communities in both the United States and Australia, AUSFTA embodies the idea of our enduring partnership; our Mateship. The 15th Anniversary of AUSFTA provides a time to reflect and celebrate the innovation, jobs and prosperity both nations continue to foster across the Pacific.
United States of America country economic fact sheet [PDF 33 KB] - Department of Foreign Affairs and Trade (note link doesn’t seem to work)
Trade and investment opportunities with Australia - The Australian Trade and Investment Commission (Austrade)
Australian Company Success Stories - The Australian Trade and Investment Commission (Austrade)