U.S.-Australia Free Trade Agreement

U.S.-Australia Free Trade Agreement

On January 1, 2005, the U.S.-Australia Free Trade Agreement came into effect. The Agreement eliminates tariffs on 99 percent of U.S. manufactured goods exported to Australia, accounting for 93 percent of all U.S. exports to the nation.

On July 14, 2004, the U.S. House of Representatives passed legislation approving and implementing the U.S.-Australia FTA by a vote of 314-109. The U.S. Senate passed the FTA the following day by a vote of 80-16. President Bush signed legislation to implement the U.S.-Australia Free Trade Agreement on August 3, 2004. The Australian Parliament approved the U.S.-Australia Free Trade Agreement on August 12, 2004.

Australia is one of our oldest and closest allies and shares our common values. Australia has been an active participant in international affairs since World War I and has fought beside the United States and other allies in every significant conflict to the present day, joining coalition forces in the Persian Gulf in 1991, Afghanistan in 2002, and Iraq in 2003. The United States and Australia share impressive economic growth and productivity growth. Both have a strong commitment to trade and investment liberalization. Australia is the 17th largest economy in the world. With the legal, regulatory, and ideological similarities between the United States and Australia, and with the background of our military and security relationship, Australia is an ideal trading partner. The United States and Australia have major interests in each other’s economies. The United States has long had a large trade surplus with Australia. Australia is the 15th largest export market for the United States and the United States is the largest destination for Australian exports. The United States is the largest investor in Australia, while Australia is the eighth largest investor in the United States.

In 2015, the United States exported $25 billion worth of goods to Australia. The United States enjoys a trade surplus with Australia that reached over $14 billion in 2013. Top export categories from the US to Australia were transportation equipment, non-electrical machinery, chemicals, and computers.

Australia’s diverse landscape and abundant natural resources has provided the country high level of foreign investment for exporting commodities such as coal, iron ore, copper, gold, natural gas, uranium and renewable energy sources.

In addition to being a large exporter of natural resources, energy, and food, Australia also has a significant service sector. Main imports for Australia include machinery and transport equipment, computers and office machines, telecommunication equipment, crude oil and petroleum products.

U.S. consumers import a wide variety of goods from Australia. Manufactured food products, including meat products, beverages, and spirits are America’s largest imports from Australia. Other key imports include specialized optic, photo and surgical instruments, chemicals, iron and steel. More than half of U.S. imports from Australia are inputs or capital goods used to manufacture products in the United States.

A comprehensive free trade agreement combined more than 342 million consumers in a market of  $18.9 trillion annually. Australian companies employ more than 84,000 American workers.

Australia is California’s 13th largest export partner. California is the largest state exporter to Australia, with more than $3.4 billion in exports from California to Australia in 2015.

History of the U.S.-Australia Free Trade Agreement Negotiations

Australian Trade Minister Mark Vaile and Ambassador Robert Zoellick met on January 30, 2002 with a Free Trade Agreement between the two countries a major topic of discussion. After a very positive meeting, the two trade leaders agreed to direct trade officials to begin examining the elements of an FTA. In June 2002, Australian Prime Minister John Howard visited the United States and in October 2003, President Bush visited Australia.

In 2003, there were five of rounds of negotiations. Nearly 100 negotiators from both countries worked on the FTA. There are nearly 20 chapters of the agreement, including, but not limited to agriculture, industrial products, services, investment, intellectual property, competition policy, market access, environment, labor standards, technical barriers to trade, government procurement, e-commerce, financial services, telecommunications and broad legal administrative arrangements such as dispute settlement. As a result of these efforts, the FTA was completed on February 8, 2004.

The California Chamber, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.

  • A U.S. – Australia Free Trade Agreement will create a seamless business environment between the two economies, thereby bringing measurable business benefits in all sectors.
  • An FTA will encourage other countries to join in a new round of market-opening multilateral negotiations.
  • A U.S.-Australia FTA will set good benchmarks for opening other markets in global trade negotiations and for other FTAs regionally and globally.
  • An FTA will strengthen the linkages between the United States and Australia – the United States’ oldest and closest ally in the strategic Asia-Pacific region.

Other Free Trade Agreements

Economic ministers from Australia, New Zealand and the Association of South East Asian Nations (ASEAN) reached an agreement on September 5, 2004, to begin Free Trade Agreement negotiations. The ministers recommended that free trade negotiations begin next year with the intention of concluding negotiations by 2006. Two-way trade between ASEAN and Australia is around $22 billion.

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