Automotive Trade and Exports
The Australian automotive industry is highly trade oriented with more than 80 per cent of domestic sales being imported and around half of total domestic manufactured vehicles being exported.
Australian automotive exports grew to record levels in 2008 with over 160,000 vehicles exported to markets including the Middle East, the America’s and Europe. The value of these exports has continued to rise with total automotive exports worth $5.8 billion.
The collapse in 2008 of the WTO Doha Round of trade negotiations is a major disappointment to the Australian automotive industry which sought broad ranging liberalisation of tariff and non-tariff barriers to automotive trade through this process. Re-establishing multi-lateral trade discussions should be a priority issue for the new Australian Government.
Whilst the Australian automotive industry is already very open to competition from imports Australian automotive manufacturers continue to face significant tariff and non-tariff barriers. This discrepancy will increase further when Australian automotive tariffs are reduced to 5 per cent in 2010, without reciprocal access to overseas markets.
Whilst Bi-lateral agreements are important in removing barriers to trade, the focus of government should be on achieving substantive gains through multi-lateral negotiations which provide tangible benefits to Australian industry. The pursuit of bilateral and regional trade agreements should complement the multilateral negotiations under the WTO. Bilateral and regional agreements can facilitate the reduction of global market distortions in a sometimes more timely manner than multilateral action.
The Australian Government is currently negotiating six free trade agreements, each with significant importance to the automotive industry including ASEAN, China, Japan and the Gulf Cooperation Council.
Gaining access to the ASEAN automotive market is a high priority for the Australian automotive industry. This would provide the industry with the opportunity to become part of the division of labour that is now being established within this region. Australia’s exclusion from serious participation in the ASEAN automotive industry weakens its prospects to become globally competitive. It also means it is necessary for the Australian automotive industry to develop export markets much further from Australia, where market access can be achieved, e.g. the Middle East and the United States.
The Gulf Cooperation Council is significant for the Australian automotive industry as it is the destination for a large percentage of Australia’s passenger motor vehicle exports. The growth in demand for automotive products in the region has been rapid and has been essential to the growth in Australian automotive exports over the past five years.
The Australian Government has also commenced the development of a free trade agreement with other key vehicle manufacturers including India and Korea. The FCAI will aim to ensure that these negotiations focus on addressing non-tariff barriers to trade as well as reciprocal access arrangements for Australian exporters.