The Impact of America’s Elections on Australia
By Jitendra Deo
Chief Executive Officer
JD Group Australia
In 2004, Australia and the United States signed a landmark free trade agreement (FTA) following a year of intense negotiations. This agreement marked Australia’s second FTA, after its earlier agreement with Singapore in 2003, and was a pivotal moment in Australian trade policy. The U.S.-Australia FTA established a framework that not only enhanced bilateral trade but also paved the way for Australia to pursue further FTAs with other nations, including Japan, China, India, South Korea, and Malaysia.
Historically, Australia’s trade landscape has evolved significantly since its early colonial days, which were heavily reliant on imports from Europe. As local industries began to emerge, Australia shifted to exporting resources such as coal and wool. Initially, trade policy was tightly controlled by the British Colonial Office until the mid-19th century when greater autonomy was granted to Australian colonies. The gold rush and subsequent agricultural booms positioned Australia as one of the wealthiest nations per capita by the 1880s.
However, the economic collapse during the 1890s depression intensified debates between free traders and protectionists, leading to a complex tariff regime post-Federation.
Throughout the 20th century, Australia predominantly adopted protectionist policies, employing high tariffs to support local industries, particularly after World War I and during the Great Depression. This approach began to change in the 1970s as economic pressures and globalization prompted tariff reductions, leading to Australia signing the General Agreement on Tariffs and Trade (GATT) in 1947.
By the late 1990s, with changing global trade dynamics and a rising trade deficit with the U.S., there was a shift in Australian policy towards negotiating bilateral FTAs. The successful negotiation and implementation of the U.S.-Australia FTA was a significant step in this transition, promoting greater trade integration and economic cooperation between the two nations, ultimately reshaping Australia’s approach to international trade.
Defining Moment in Australian History
The Australian United States Free Trade Agreement has polarised opinion in Australia.
Critics claim that Australian negotiators failed to gain a significant share of the American market while at the same time providing significant concessions to the US on biosecurity, health policy, intellectual property and government procurement policies.
The process was further criticised for being hasty and secretive.
Advocates claim that one of the largest markets in the world was opened to Australian producers and consumers and that the agreement brought two long-term allies even closer.
The Australian American Free Trade Agreement marked a shift from Australia’s traditional focus on tariff reduction and multilateral trade agreements towards bilateral, preferential liberalisation.
The agreement became the catalyst for the Australian Government to initiate similar discussions with other major trading partners – Japan, China, India, South Korea, Malaysia and ASEAN all began negotiations with Australia over the next four years.
