Trade Between Australia And Japan

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