Australia
by Jim
McCarthy
U.S. Commercial Service,
Australia
Originally
appearing in ExportAmerica
- With additional links
supplied by Paul E.
Litton
- Ypsilanti US Export
Assistance Center
Australia
is the world's 14th-largest
economy by GDP, according to
the Economist Intelligence
Unit. Despite the regional
economic turmoil of the late
1990s
and the more recent downturn
in the U.S. economy, Australia
has enjoyed an unprecedented
period of economic growth over
the last decade. The recent
drought notwithstanding, the
Reserve Bank of Australia
predicts that the Australian
economy will continue to grow
on the strength of sustained
consumer spending and housing
construction. Most economic
forecasts call for GDP growth
in 2003 of more than 3
percent, putting Australia
near the top of all OECD
countries. However, as with
most growth rates, this will
depend on the overall health
of the world economy.
Unemployment has risen in
recent months to 6 percent but
is still near historic lows.
Inflation is likely to stay
between 2.5 and 3 percent this
year.
Australia's financial
stability was recently
underscored when Standard and
Poor's raised the country's
international credit rating
from "AA+" to
"AAA," its highest
financial rating in 17 years.
The financial rating company
cited the strong banking
sector, the federal budget,
and a healthy foreign exchange
market as reasons for the
upgrade. Only 16 other
countries have garnered an
"AAA" rating,
including the United States,
France, Germany, and the
United Kingdom.
The country's stability is not
limited just to its finances.
A number of studies have rated
Australia as one of the safest
and securest places in the
world to do business in
economic, political, and
social terms.
When it comes to Australia,
most Americans are familiar
with Sydney, Melbourne, and
perhaps natural formations
such as the Great Barrier Reef
and Ayers Rock, also known as
Uluru. Sydney, which is in the
state of New South Wales,
achieved prominence with its
near flawless organization and
hosting of the 2000 Summer
Olympic Games, but its stature
continues as a regional
financial and business
services center. Many U.S.
firms are located in
Melbourne, as it is a key
manufacturing base.
Still, Australia’s economic
activity is not limited to the
major metropolitan areas of
Sydney (approximately 4
million) and Melbourne (about
3.5 million). Brisbane in
Queensland is one of the
country's fastest-growing
cities. Many southern city
dwellers have moved to
Brisbane, attracted by the
lifestyle and affluence of the
area as well as the thriving
cultural community. Adelaide
in South Australia is known
for its automotive
manufacturing and, with nearby
Barrosa Valley, the high
quality of its wines. Perth in
Western Australia has the
country’s highest state
economic growth, with recent
discoveries of oil and natural
gas on land and offshore.
Perth is a mere four-hour
flight from Singapore, which
puts it closer than Sydney to
Southeast Asia and illustrates
the vast territory of
Australia.
Strong
U.S.-Australian Trade Ties
U.S.-Australian
trade ties are among the
strongest in the world. The
Australian market is extremely
sophisticated and boasts an
excellent communications and
transportation infrastructure.
Through a common language and
shared business values,
American companies often feel
quite at home in Australia.
Despite its distance from the
United States and relatively
small population of 19 million
people, Australia is the
13th-largest market for U.S.
goods, totaling just over $13
billion in 2002. The United
States is the largest investor
in Australia across a wide
range of industries, including
consumer goods, automobiles,
mining, oil and natural gas
production, financial
services, and information
technology. Similarly, the
United States is the largest
recipient of Australian
investment overseas. Further
investment could be
accelerated by the adoption of
the Australian-U.S. agreement
on double taxation, which was
negotiated in 2001 and should
be approved in 2003.
Import duties are minimal.
Since the early 1970s, average
tariff levels have declined to
the point at which 86 percent
of Australia’s tariffs are
between zero and 5 percent.
The average most-favored
nation rate for industrial
products is 4.7 percent.
Australia’s highest tariffs
apply to apparels and certain
finished textiles, passenger
motor vehicles and components,
and footwear.
The United States enjoys a
trade surplus with Australia
($6.6 billion in 2002), second
worldwide only to the
Netherlands. Although the
surplus declined in 2001 due
largely to a strong U.S.
dollar and the aftereffects of
the events of September 11,
2001, it bounced back in 2002
to $6 billion. Coincidentally,
so did the Australian dollar,
which gained in value from a
low of over A$2.00 to the U.S.
dollar in 2000 to its current
level of close to A$1.69.
The following sectors offer
good prospects for U.S.
exports:
-
Information
and communications
technology
-
Military
and aerospace
-
Safety and
security
-
Medical
equipment and health care
-
Environmental
technologies
-
Energy and
mining production.
Tourism
Travel and
tourism also represent
important market opportunities
for American companies.
Australia has risen to the
eighth-largest market in the
world for visitors to the
United States. Australians
stay longer (more than three
weeks on average) and spend
more in time and money than
most international visitors to
the United States. Qantas and
Virgin Blue, the principal
airlines serving Australia,
have added Boeing 747-400s for
regional and U.S. travel.
Transportation
Infrastructure
Australia's
transportation infrastructure
encompasses 280 licensed
airports, including nine
international gateways in
Sydney, Melbourne, Brisbane,
Perth, and Cairns. Two-thirds
of interstate cargo is carried
on 500,000 miles of paved
roads. Railroads cover another
24,000 miles and will soon see
the long-awaited establishment
of a link between Darwin and
Adelaide. Australia also
boasts a strong lineup of
ports in Sydney, Newcastle,
Melbourne, Brisbane, Adelaide,
and Fremantle.
Information and
Communications Technology
Australian
citizens are savvy users of
information and communications
technologies. Approximately
two-thirds of Australian
households own or lease a
computer. A recent Nielsen
survey cited Australia as one
of the most mature Internet
markets in the world. It is
the eighth-largest Internet
market in the world (10.5
million users), with one of
the highest penetration rates
(72 percent). Last year, the
Economist Intelligence Unit
rated Australia sixth in the
world and first in the region
in "e-readiness," an
indicator of the ability of
businesses to conduct
e-commerce. Although broadband
has yet to play the same kind
of role in Australia that it
has in the United States,
demand for broadband services
soared last year in both the
business and residential
sectors, and investment in
additional broadband network
and services could reach $500
million by 2005–2006. One
million broadband customers
are possible by the end of
2005. To learn more
about the Australian ICT
market, please visit the ICT
Team Australia page: http://www.emich.edu/.
Biotechnology
Biotechnology
is an important sector for
U.S. companies. Australia has
an international reputation
for multidisciplinary
scientific advancement and
early adoption of new
technologies. The country is
proud of its history and
credits in areas such as the
development of penicillin, the
cochlear implant, treatment of
sleep apnea, and the detection
of cancerous cells by
computer. Australia continues
to be a leader in life science
research, and the country’s
technological productivity is
very high, with a per capita
patent filing rate similar to
that in the United States.
Due to these and other
factors, nearly 1,000 U.S.
companies are represented in
Australia, and more than 300
have made Australia their
Asian base for all or part of
their operations. But the
increasingly multicultural
nature of Australian society
is also playing a role.
Although English is the
language of business in
Australia, one in five
households use a language
other than English. In order
to adapt to the diverse nature
of the growing immigrant
community, call centers and
other regional operations of
multinational companies have
developed in Australia to
service many Asian countries.
The American Chamber of
Commerce in Australia has one
of the largest membership
bases in the region. The
Council of Great Lakes
Governors recently established
its Australasian base in
Sydney, and a number of other
states and cities have
representative offices for
trade or tourism.
Australia:
Facts and Figures
Total area: 7,686,850
square km (a little
smaller than the 48
contiguous U.S.
states)
Population: 19.7
million
GDP: $465 billion
(2003 forecast)
GDP growth: $3.7%
(2003 forecast)
Inflation: 2.5% (2003
forecast)
GDP by sector:
services 72%, industry
25%, agriculture 3%
Main industries:
mining, industrial and
transportation
equipment, food
processing, chemicals,
steel
Currency: Australian
dollar
Exports: coal, gold,
wheat, alumina, iron,
ore, meat, machinery,
transportation
equipment
Imports: machinery,
transportation
equipment, computers,
office machines,
telecommunications
equipment, crude oil,
petroleum products
Languages: English,
native tongues
Sources: CIA, EIU. |
Similar,
But Different
In many ways,
American companies feel quite
at home when doing business in
Australia. The similarities in
language, culture, business
practices, and customer
expectations provide for an
atmosphere in which
transactions can be made more
easily than elsewhere. As one
local observer noted, "I
believe the only other country
Americans find as familiar and
easy to work in is
Canada."
Australians are quite
knowledgeable and up-to-date
about developments and trends
in the United States. Many
Australians have relatives and
friends who live in the United
States, or they have lived
there themselves for extended
periods. Australians are
gracious and yet informal and
direct in their business
dealings. Australians often do
business on a first-name
basis, and business cards are
exchanged in a manner that
Americans would recognize.
Appointments are relatively
easy to schedule at
practically all organizational
levels. Americans find that
many Australian executives are
pleasant, approachable, and
willing to meet to discuss
business. The best policy is
to arrange an appointment one
month in advance.
For the business traveler, the
best time to visit is from
March through November, since
the tourist season lasts from
December through February.
Avoid scheduling visits around
Christmas and Easter, since
many executives will be on
vacation during these periods.
Free Trade Agreement
on the Way
On November
14, 2002, Australian Prime
Minister John Howard and U.S.
Trade Representative Robert
Zoellick announced that
negotiations would begin
towards a free trade agreement
between the two countries in
2003. Zoellick stressed that
the United States would aim
for a comprehensive agreement.
In a letter to Congress,
Zoellick said that the United
States had "much to
gain" in these
negotiations, in that greater
access to the Australian
market "would further
boost trade in both goods and
services, enhancing employment
opportunities in both
countries." An Australian
study indicated that a free
trade agreement with the
United States would boost
Australian GDP by 0.4 percent,
or about $2 billion per year.
U.S. GDP would also grow by
about the same amount. The
first round of free trade
agreement talks commenced in
March.
Major Upcoming Events
Following on
the huge success in the
organization of the 2000
Summer Olympic Games,
Australia will serve as the
host of several important
conferences and sporting
events.
Other events
covering best prospect
industries are located in the
Country Commercial Guide and
on the Australia
US Commercial Service Homepage.
Visitors to Australia for
these or other events can
maximize the business aspects
of trips and enhance the
chances of business success by
contacting the Commercial
Service in advance by e-mail (sydney.office.box@mail.doc.gov)
or phone (+61-2-9373-9205).
For
additional Information
Please see our
companion articles:
http://www.emich.edu/ict_usa/AUSTRALIA.htm
- an overview of the
Information and Communications
Technology Market in
Australia.
Date Updated: March 27, 2007
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