Social Issues / Trade Between Australia And Japan

Trade Between Australia And Japan

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Autor:  anton  22 December 2010
Tags:  Between,  Australia
Words: 959   |   Pages: 4
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TRADE BETWEEN AUSTRALIA AND THE NATION OF JAPAN - REPORT

EXECUTIVE SUMMARY

This document aims to shed light on the issue of trade between Australia and Japan. In this comprehensive, yet brief report, areas covered include:

• Development of trade

• Prospects for trade

• Challenges for trade

These three areas are important in finding out how trade with Japan affects Australia.

INTRODUCTION

An active APEC (Asia Pacific Economic Corporation) member, Japan is the second most dominant world economic power. Being a world power endows it to having an influential role in not only in regional affairs but also global.

Japan is a large supporter and participant in humanitarian programs as well as providing ODA (Overseas Developmental Assistance) to many third world and developing nations. It is the world’s largest creditor country.

Japan is generally and traditionally a difficult market for foreign companies to penetrate. However, through pressure from the US government in the 1980s, Japan has opened its gates to overseas competition. Nowadays imports to Japan are increasing, as there is greater consumer demand for more variety in products as well as a general demand for western paraphernalia.

Japan shares bi-lateral agreements with many Asian nations as well as Australia. Australian and Japan share an excellent relation based on over 100 years of bi-lateral trade. Through the past few decades however, the Australian export opportunities have dramatically increased. This is especially true for Japans’ regional markets such as Kansai. Australia exports over $30,000 million to Japan and imports around $17,000 million worth of goods and services. Australia is in a very good position, as it is one of few countries that has a trade surplus with Japan.

DEVELOPMENT OF TRADE

The Agreement on Commerce between the Commonwealth of Australia and Japan, 1957, was the basis for the Australia and Japan trade relations. Although this was a largely opposed idea (WWII), prime-minister Robert Menzies went forward with the plan. This was mainly due to the potential opportunities for Australia.

The next treaty was the Basic Treaty of Friendship and Cooperation between Australia and Japan, 1976 (Nara Treaty). This particularly broadened the relationship between Japan and Australia.

The late 1980s saw a sharp rise in trade between the two countries as import and export quantities increased. From this time onwards, Australia’s trade relations quickly increased and trade produce variety expanded.

Another key item was the Joint Declaration on the Australia-Japan Partnership, 1995. Prime-minister Paul Keating presented this to Japan. This further developed trade between the two nations.

Annually, rates of import and export have been increasing by 10%-15% or keeping stable with two high points at late 1970s and 1980s. However, last year the growth for both export and import were at 9.1%.

CURRENT TRADE STATISTICS

Australian exports to Japan (annually) total to approximately A$31,076 million. Australia’s import with Japan is much less at A$17,335 million. In 2006, 4.8% of all imports to Japan were supplied by Australia and 1.9% of all Japanese exports were to Australia.

The major exports to Japan from Australia include:

• Coal

• Iron Ore

• Bovine Meat

• Aluminium

The major imports from Japan include:

• Passenger Motor Vehicles

• Transporting Goods Motor Vehicles

• Refined Petroleum

• Civil Engineering Equipment

This can be seen in the following table:

The following is the trade statistics for the past nineteen years.

PROSPECTS FOR TRADE IN THE FUTURE

The largest prospect for the future is certainly a Free Trade Agreement with Japan. Although these have been underway, they have not been extremely successful. Another talk is planned for APEC as well as November 2007. The main aim of these talks is to discuss the advantages and disadvantages of an FTA agreement. Japan’s reluctance is well acknowledged, after all, Australia will be the biggest winner through this. The transfer and price of goods (especially electronics and motor vehicles) would become cheaper. The FTA would also improve productivity and availability of resources. This would push Australia in to being close to the leading economies of the world in the long-term view.

Another prospect is Australia’s mineral resources. Australia is predicted to be holding much of iron ore, coal etc. This means that we are on top of vast resources that can be sold to other countries. Japan would benefit as it purchases a large amount of our coal and iron ore. This advantage could also be used to lever a FTA with the Japanese. The infinite capabilities of Japanese technology would allow Australia to keep up with the world in many areas. Of course, most of these are technologically related.

CHALLENGES WITH TRADE FOR THE FUTURE

The main challenge about trade is the long-term condition of Japan. Although Japan performs well now, it is a receding market. There is a significant challenge for Japan in the future. It is facing a dwindling work population, as the average populace gets older. This provides a serious risk as if the workforce reduces in size so does the production. And production is one of the main factors that make Japan wealthy. In addition, even though it is the second largest economy in the world it will face high expenditure. This is a serious issue if not properly taken care of. However, a country with one of the highest GDP’s in the world is unlikely to mistreat this issue.

CONCLUSIONS

The trading relation with Japan has boosted Australia far up. It is the case of a well-developed power helping a growing one. Each side receives benefits from it; it is a win-win situation. Australia’s links with countries, including Japan, is helping it grow and flourish. The Free Trade Agreement, if signed, will provide greatly for the people of Australia. It would also enhance the appeal of our country against other Asian nations. The statistics are proof that the trade is providing much to both countries. With the help of Japan, Australia can move forward.

BIBLIOGRAPHY

http://en.wikipedia.org/wiki/Free_trade_area

http://www.dfat.gov.au/geo/japan/japan_brief_introduction.html

http://www.dfat.gov.au/geo/japan/fta/index.html

http://www.fta.gov.au/default.aspx?FolderID=162

http://www.dfat.gov.au/geo/fs/jap.pdf

http://www.dfat.gov.au/geo/fs/jap.pdf

http://www.dfat.gov.au/geo/japan/japan_brief_bilateral.html

http://www.dfat.gov.au/geo/japan/japan_brief_bilateral.html

http://www.dfat.gov.au/geo/japan/aus_relations/index.html

http://www.abs.gov.au/ausstats/abs@.nsf/featurearticlesbyCatalogue/DDA1C78106F662FDCA2569DE002A3031?OpenDocument

http://www.trademinister.gov.au/releases/2006/mvt009_06.html



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