Looking backwards and forwards
When AUSFTA was signed in 2004, the world looked significantly different. The United States was
twenty times the size of behind it, an unchallenged centre of the world economy. Fast forward to 2011 and the Australian dollar
had appreciated 40 per cent against its US counterpart ± a completely unexpected occurrence ± while
China became for FDI flows.
These factors contributed to the expansion of trade surpluses with Asia, an increased goods and services deficit with the United States balance of payments position. Bilateral trade in goods and services rose by 86.7 per cent since the FTA was signed from US$32.6 billion in 2004 to US$60.8 billion in 2011. US goods exports to Australia grew more quickly than imports, up 99 per cent to over US$27 billion in 2011, while US imports from gest trading partner behind China and Japan. Momentum towards the FTA increased as the WTO Doha round began to fail.
The United States responded by accelerating bilateral trade liberalisation, emphasising WTO-plus agreements with provisions on investment, services, competition and people movement that were beyond the usual scope of international trade reform. The longer term concept of a Free Trade Area of the Americas (FTAA) developed as a way to reduce barriers to trade and investment across the region ± creating common rules for commerce.
The Trans-Pacific Partnership (TPP) talks that followed AUSFTA retain this goal, seeking to establish a diplomatic,
economic, strategic, and otherwise ± in the Asia-Bilateralism has been
controversial, as trade experts would prefer multilateral liberalisation through the WTO, but the
experience of AUSFTA and other US FTAs strongly suggest they have resulted in a significant expansion
of trade (see table).
AUSFTA followed the NAFTA template of opening bilateral markets while avoiding increased barriers against other countries and allowing preferences to be accorded in other trade agreements, as long as firms in both countries continued to enjoy MFN and national treatment. Under the agreement, duties on over 80 per cent of tariff lines (averaging 4-5 per cent) went to zero from 1 January 2005 with virtually all non-agricultural goods duty free by 2015.
These factors contributed to the expansion of trade surpluses with Asia, an increased goods and services deficit with the United States balance of payments position. Bilateral trade in goods and services rose by 86.7 per cent since the FTA was signed from US$32.6 billion in 2004 to US$60.8 billion in 2011. US goods exports to Australia grew more quickly than imports, up 99 per cent to over US$27 billion in 2011, while US imports from gest trading partner behind China and Japan. Momentum towards the FTA increased as the WTO Doha round began to fail.
The United States responded by accelerating bilateral trade liberalisation, emphasising WTO-plus agreements with provisions on investment, services, competition and people movement that were beyond the usual scope of international trade reform. The longer term concept of a Free Trade Area of the Americas (FTAA) developed as a way to reduce barriers to trade and investment across the region ± creating common rules for commerce.
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| Trade Expansion under U.S. FTAs (bilateral trade in goods) |
AUSFTA followed the NAFTA template of opening bilateral markets while avoiding increased barriers against other countries and allowing preferences to be accorded in other trade agreements, as long as firms in both countries continued to enjoy MFN and national treatment. Under the agreement, duties on over 80 per cent of tariff lines (averaging 4-5 per cent) went to zero from 1 January 2005 with virtually all non-agricultural goods duty free by 2015.