This was an increase of five percent from the previous year, with iron ore showing a massive 70 percent growth, accounting for more than half of the state’s total merchandise exports. Other exports of gas, crude petroleum, precious metal ores and nickel ores also showed very strong growth.

South Australia’s exports also grew over 21 percent, primarily driven by wheat. The ACT and NSW showed some growth but in numbers far smaller than WA and SA while Queensland’s export numbers dropped due to last year’s extreme weather including floods and Cyclone Yasi.

New South Wales remained the nation’s largest importer, with $104 billion worth of goods and services entering the state.

The value of Australian exports also grew 17.3 percent in the financial year 2010/11 with price being the main driver as volumes remained steady.

Full analyses and tables from the annual publication Australia’s Trade by State and Territory 2010-11 are available without charge on the Department of Foreign Affairs and Trade website.

According to the report, titled The APEC Region – Trade and Investment, 2011, produced by The Department of Foreign Affairs and Trade, Australia’s exports to the region grew in 2010 by 17 percent. Imports, in comparison, grew six percent to $182 billion.

APEC accounted for 46 percent of the world’s total exports in 2010 and 56 percent of world GDP, demonstrating the importance of the Asia-Pacific region to the world’s economies. This is further demonstrated by the APEC region increasing exports to the world by 26 percent to US$8.7 trillion in 2010.

The region’s importance to Australia was also highlighted in the report, showing APEC accounted for more than two-thirds of Australia’s exports and imports.

The US was the largest exporter in APEC in 2010, with world exports of $1.8 trillion, closely followed by China with exports of US$1.7 trillion and Japan with exports of US$911 billion. Most of APEC’s trade is among other members, with 68 percent of exports and 65 percent of imports coming from within the region.

The complete publication and analysis is available through DFAT.

In a speech titled ‘40 years: The Australia China Relationship’, Rudd spoke about the continuing economic growth in both countries, and how the relationship between the two will continue to develop as, “Australia and China depend on each other.”

“We have both experienced strong growth over the past two decades,” Rudd said. “China’s growth has been phenomenal. But Australia, too, has had 19 years of uninterrupted growth. The rise of China and Australia simultaneously is no coincidence.”

With total trade between the two nations now reaching over $100 billion a year, Rudd spoke about Australian exports to China growing faster than imports. In particular, he mentioned wine exports to China, which have risen from just over $60 million in 2007-8 to $178 million in 2010-11. “There’s a growing Chinese thirst for Australian wine,” Rudd said.

In the wake of global financial turmoil, it is unsurprising that Rudd places more importance on the relationship between China and Australia over relationships with other nations, particularly the turbulent economies in Europe.

“We have more at stake in China — and China has more at stake in Australia — than either country has with many other partners, “ said Rudd. “Not New Zealand, not Canada, nor any European state. Our trade relationship with China is considerably larger than with the 27 countries of the European Union combined.”

With Rudd emphasising the co-dependence the two nations have on each other, he also highlighted the importance of working on mutual understanding. “Both of us have come to depend on the relationship, which makes it important that we keep asking ourselves hard questions about where it can be improved, and how we can work through stumbling blocks,” Rudd said. “We are critical to each other — and have a lot to gain by working more closely together. China is our most important economic partner. And Australia is more important to China’s economy than any other. Australia has become an integral engine for China’s growth — just as China has become a dynamo driving our prosperity.”

The Australia-China Forum, aimed at opening up discussion between the two nations on topics including politics, economics, and furthering the diplomatic relations between each country, included delegates such as the chairman of the foreign affairs committee of the National People’s Congress, Li Zhaoxing.

“With the world licking its lips for our resources, our export earnings are—and will be—through the roof,” predicted Deloitte Access Economics director and economic forecaster Chris Richardson.

The March Business Outlook report released by Deloitte Access Economics suggests surging commodity prices will deliver more than double the $9 billion lost to recent natural disasters during the coming year. It comes as Wayne Swan warned Australians they couldn’t expect “a repeat of the rivers of gold that flowed into the Government coffers in the last mining boom”.

However Richardson believes the Government’s predictions of economic doom and gloom are just “scene-setting”, and rising commodity prices will actually make it easy for the Government to return the budget to surplus.

“The floods and cyclone cost us a lot. But at the same time as we were worrying about the floods and cyclone and the earthquakes and the tsunami, the world prices for what we sell were sharply rising; the impact on our nominal gross domestic product in the year ahead is $20 billion,” he added. “That $20 billion flows from just a few months’ worth of commodity prices rises; the world is now begging us to grow faster.”

While the short-term economic outlook is good, Richardson warned economic growth is slow and labour is in short supply, particularly for labour-dependent commodity industries. “Demand pressures are already rising at a time when spare capacity is modest, while the weakness in productivity gains means labour cost growth is travelling faster than inflation.”

The Australian appetite for imports is also expected to increase, meaning the predicted trade surpluses won’t last forever.

Data from the Australian Bureau of Statistics revealed the deficit totalled $205 million, which came as a surprise to economists who had forecast a surplus of $1.1 billion for February.

“We’ve been recording very large trade surpluses for some time and we did think that surpluses would narrow in coming months, but we weren’t predicting the deficit,” admitted Besa Deda, St George Bank’s chief economist. The last time Australia recorded a trade deficit was in March 2010.

Deda put the fall down to recent natural disasters. “In January, coking coal and thermal coal exports were down… and I imagine volatility on that front (is) probably affecting the trade result.” Exports declined two percent in February following flooding in Queensland and fires in Western Australia.

Meanwhile, imports rose by five percent to $2.682 billion. This is primarily due to a 26 percent jump in fuel prices over the period. JP Morgan economist Helen Kevans said the trade data showed the obvious impact of the Queensland disasters, but the deficit should be short lived.

“In terms of the outlook thereafter the sheer size of this investment boom and the fact that it is led by investment in resource companies, exports of our key commodities including iron ore and coal should increase substantially throughout the year,” she said.

While the deficit came as a surprise, overall trade data for the year is positive. Exports rose 15.5 percent over the year to February while imports rose 8.1 percent.

The annual State of the Industry 2010 report details the pressure the sector has come under in the last six years, underlining the $4.5 billion surplus in 2004/05 to a $1.8 billion deficit in 2009/10.

“This alarming result shows food and grocery manufacturing—which employs 288,000 people—is now a net importer of food and grocery products which impacts industry’s growth and competitiveness,” said AFGC chief executive Kate Carnell.

“Industry is still a major exporter but imports are rising fast, eroding the trade surplus historically enjoyed by the industry. To protect Australia’s food supply and overcome this challenge, there must be a ‘whole-of-government’ national strategy to ensure food and grocery manufacturing’s long-term growth, increase export earnings and boost competitiveness.”

The report also recognised the importance of protecting the future needs of industry in terms of job growth and investment as well as meeting the significant food supply needs into the future.

“The industry employs more than three percent of all employed people in Australia but lost 3,400 jobs since 2006/07. The sector pays wages of more than $13 billion a year,” said Carnell. “There are also real challenges facing the industry including the increasing cost of energy, availability of water, the surging Australian dollar and the availability and cost of good employees.”

Download the full report State of the Industry 2010: Essential Facts and Figures at www.afgc.org.au.

First staged in Sydney in 2008, the Import Export Show in late 2009 and early 2010 travelled as a road show visiting capital cities around Australia. The next show, to be held on September 1-2, 2010 at the Sydney Convention and Exhibition Centre, will see a return to the bigger format.

The free exhibition will allow visitors to seek services and solutions for importing and exporting operations, while the complimentary seminars sprinkled throughout the show will allow attendees to find out more about various aspects of global business.

For a more comprehensive experience, the paid workshop program provides importers and exporters with a range of topics catered towards businesses at different stages of their global journey, from starting an import or export business to addressing issues for more advanced importers and exporters. There will also be market-specific information available via a global opportunities stream.

See www.importexportshow.com.au for further details and the workshop program.

As Australia’s only national road show and mini-exhibition for SMEs involved in international trade, the Import Export Show On the Road features two full days of seminars and workshops delivered by experts in international trade alongside an exhibition of service providers.

This is a fantastic opportunity to learn how to start, grow and manage your import and/or export business. In all, more than 30 expert speakers from all over Australia, plus case studies presented by the likes of Paul Greenberg, CEO of Deals Direct, will be on hand to provide valuable information and answer your questions.

The program is split into four half-day sessions. Each session costs $65 and includes lunch and morning/afternoon tea.

February 24, morning: An intensive session that includes an economic update, legal advice on international supplier/distributor contracts and intellectual property plus three breakout sessions on doing business with China, global franchising and import export 101.
February 24, afternoon: Split into beginner and advanced streams. Both streams will offer comprehensive information about freight and logistics, and banking and finance.
February 25, morning: Just for exporters. Everything from hearing from successful exporters to hearing about government support for exporters. Information packed and inspirational!
February 25, afternoon: Just for importers. Hear from Australia’s most successful online retailer, Paul Greenberg of Deals Direct; how to comply with import regulations; the top 10 tips for successful importing and e-business insights. A very full afternoon to get your import business on track for success.

Where:
VECCI
5th Floor, Industry House
486 Albert Street
East Melbourne

When:
9am – 5pm
February 24 and 25, 2010

Details and registration: www.importexportshow.com.au

The next event is in Brisbane on March 9 and 10.

Naturally, many market economists have also speculated as to how the high exchange rate would affect exporters. The general school of thought says that an appreciation of the exchange rate – that is the Australian dollar is more expensive in terms of US dollars – makes Australian exports more expensive and imports cheaper.

Goods and services exports that are particularly price elastic, where consumers are sensitive to prices changes, may see demand fall sharply, while price elastic imports will see a big pick up in demand. This is assuming, of course, that lower prices are passed on.

Business groups are also worried, particularly in areas like agriculture and manufacturing where higher commodity prices are not on offer like their resources counterparts. While non-rural commodity prices have been holding up better than expected – thanks to the China’s insatiable appetite for coal, iron ore and liquefied natural gas – other sectors of the economy have not been so fortunate.

However, when you look at the dollar’s behaviour and its effect on exporters more closely, there is a little bit more to it than first meets the eye.

The dollar isn’t everything

Firstly, the exchange rate is just one factor affecting the decision to export. Most of the economic evidence shows that since the Aussie dollar was floated over two decades ago, exporters have become used to fluctuations in exchange rates as part and parcel of doing business offshore.

Why is this so? Basically, since the Australian economy became more internationalised, the majority of our exporters don’t let fluctuations in exchange rates ruin their business plans. They see a moving exchange rate as a fact of life of operating in the global economy and make their decisions based on long-term plans and building strong relationships with clients, customers and business partners.

One lesson of the Asian financial crisis that occurred a decade ago was that Australian firms that stuck in the region ‘through thick and through thin’ were well regarded in Asia when the economies bounced back. Nobody likes a carpet-bagger who takes off when the going gets rough only to magically re-appear when times are good again. We’re seeing similar things occurring in the global financial crisis too.

In fact, according to research by Austrade and DHL, while most exporters regularly monitor the exchange rate, only 20 percent believe that it will affect their decision to further invest or expand their overseas operations.

Many exporters also undertake hedging in their contacts to mitigate against future changes in the exchange rate. According to the survey data, 24 percent of large and 25 percent of medium-sized exporters engage in some form of hedging compared to only five percent of small exporters and four percent of microbusinesses.

Secondly, other economic factors are important. Of course, strong commodity prices matter, as does overall growth in the world economy. Long-term growth in export volumes are mainly determined by global economic demand, so return to growth in the world economy – particularly in the Asia-Pacific – will be a more important factor affecting exporters than a 90-cent-plus exchange rate. If the emerging economies can lead the recovery from the GFC then this will be crucial for our exporters.

Thirdly, most media commentary says that exporters will be losers from a high dollar and importers will be winners. But they are not two distinct groups. Around 45 percent of Australian exporters are also importers, so a high dollar may mean a more expensive product on the price side, but it may also be cheaper on the cost side when an exporter imports components or stock. It’s a matter of swings and roundabouts.

Don’t get me wrong, exporting is a tough game. But it is also commercially rewarding as exporters, on average, earn high profits, are more productive and grow faster than non-exporters. They can therefore absorb external shocks in exchange rates and commodity prices as they are in it for the long haul.

Australia is one of the few economies in the world to achieve export volume growth despite an 11 percent fall in world trade in 2009. That Australian exporters have achieved this, despite the GFC and the associated ‘recession porn’ we read in the press, is a remarkable achievement and helps explain why the Australian economy has gone from ‘Down Under’ to ‘Down Wonder’ in the eyes of many international investors.

—Tim Harcourt is chief economist of Austrade and author of The Airport Economist. See his column at www.austrade.gov.au/economistscorner

Red Meat Advisory Council chairman Ian McIvor said due to the latest scientific knowledge and the negligible risks of infection, “overseas countries rightly believe we have been holding on to an unfair trade barrier, something Australia rejects from other countries”.

Since 2001, beef from 22 European countries, Canada, Japan and the USA have been excluded from Australia’s market due to outbreaks of bovine spongiform encephalopathy.

The Federal Government said the blanket bans would be scrapped from March 2010 due to new scientific evidence on minimal disease risks. However, Liberal Senator Bill Heffernan said scrapping the ban would affect Australia’s ‘clean green’ image.

McIvor replied that this would not be the case as Australia would retain its international ‘negligible risk’ status and New Zealand had changed its rules in a similar way three years ago without problems.