Australian exporters stand to benefit from opportunities created by new trade agreements with the European Union, United Kingdom, Latin America, and as part of the Trans-Pacific Partnership (TPP) trade deal.
Targeting new, large overseas marketplaces will also mitigate the risk created by protectionist tendencies demonstrated by the United States and India, among others.
According to the recent AIBS international business survey conducted by the Export Council of Australia, 20 per cent of local companies want to target the US, followed by 19 per cent looking to target China, 18 per cent targeting the UK, 15 per cent targeting Indonesia, and 14 per cent targeting India and Vietnam.
Mark Hoppe, managing director, Oceania, Atradius, said: “Instability in the US market, evidenced by its trade war with China among other signs, creates a risky environment for exporters looking to focus on those top two markets. Therefore, businesses should diversify to make their operations less vulnerable to these external factors.
“As well as targeting the US and China, there are plenty of opportunities on the horizon for Australian exporters to target countries such as Japan, Mexico, Canada, and Singapore through the TPP, as well as opportunities in Europe, Latin America, and South East Asia. Smart exporters should move quickly to take advantage of these emerging opportunities.”
Exports to Latin America set to grow
The survey revealed that 30 per cent of businesses surveyed are already selling into Latin America. This is likely to increase when the government finalises a free trade agreement already under negotiation with the Pacific Alliance, which is made up of Chile, Columbia, Mexico, and Peru.
Of the top 20 markets companies had identified for expansion, Australia had in place or was negotiating a bilateral or multilateral free trade agreement with 18 of them, including six TPP members.
“Free trade deals are crucial for Australian exporters looking for favourable terms to expand into new markets,” Mr Hoppe said.
“For example, the TPP trade deal is worth an estimated AU$15.6 billion in net annual benefits to the national economy by 2030. The key sectors set to benefit are steel, wine, and agriculture. With Australian farmers facing tough conditions at home, the ability to sell into new markets will be welcome.”
Opportunities in India
Key countries who have already signed the TPP are Japan, Singapore, and Mexico. New Zealand and Canada are close to completing their ratification process, leaving Australia the last to finalise its support for the agreement.
India could also be a potentially-lucrative market for Australian exporters if Australia can reach favourable trade terms with this rapidly-growing market. While India continues to follow a protectionist approach for now, businesses should keep a close eye on developments in this space and be ready to turn their focus to India when the circumstances are right.
“To make the most of these emerging opportunities, Australian exporters must ensure their online sales channels are well set-up and offer frictionless buying for customers regardless of where they are in the world,” said Mr Hoppe.
“They should also invest in trade credit insurance to assess the market, sector and potential buyer and protect them against potential late or non-payment by customers in these markets.”