Are you considering importing goods from the United States into Australia for your commercial enterprise? The two countries maintain a strong trade relationship, with robust foundations contained in a landmark international free trade agreement. In the 2018-19 financial year, the United States was Australia’s third largest trading partner (behind Japan and China).
Below, we’ll look at the nature of the relationship between the U.S. and Australian economies. We’ve put together a list of the 5 best products you can choose to import when deciding which goods to bring across the Pacific Ocean. We’ll look at each item in detail, including relevant statistics, and assess how businesses can benefit from importing them.
What is the Australia-U.S. Free Trade Agreement?
The U.S. is our largest investor and one of our closest economic partners. In 2005, the Australian and U.S. Governments struck a key economic deal that’s now known as the Australia-United States Free Trade Agreement (AUSFTA). The treaty creates a large degree of access into both the U.S. and Australian markets, providing significant benefits to Australian businesses and consumers.
AUSFTA has now eliminated tariffs in critical sectors such as in the manufacturing, agricultural and automotive industries. The agreement has allowed Australians greater access to affordable medicine in the U.S. and has also created simple tests for rules of origin. You can read more about Australia’s economic agreements with other countries, including the United States, in our free trade agreements blog.
Why is the Australia-U.S. Market so important for importers?
The U.S. and Australia have for decades now considered each other to be close trading partners. America is also the world’s most powerful economy, so it’s important for Australian importers to take advantage of the reduced barriers to trade in the U.S. marketplace. Importers can potentially achieve a competitive edge by capitalising on the opportunities presented by AUSFTA whilst establishing long-lasting commercial relationships across the Pacific.
The tremendous economic impact of COVID-19 has only made this market so much more important. It’s essential from a global perspective for importers to keep trading internationally and keep supply chains flowing (especially when it comes to food and health supplies). The OECD argues that it’s vital “to save both lives and livelihoods”.
By importing from the United States and keeping confidence high in global markets, importers will not only achieve commercial benefits for their businesses but will also help the world get through the current crisis.
The Best 5 Products to Import
As promised, see below what we think are the 5 best products for Australian importers to consider.
According to data collected by the Observatory of Economic Complexity, cars were the top product imported into Australia from the U.S. in 2018 – worth approximately $1.56 billion in export value. The U.S. is one of the world’s top car exporters, having generated around $51.4 billion in car exporters in that same year (although, this still falls way behind Germany and Japan).
With the signing of AUSFTA, you won’t have to pay any customs duties on most automotive products from the United States. The 2.5 per cent duty on passenger cars was completely removed with the signing of the Agreement. Duties on passenger cars were also reduced to zero in 2010.
Importing vehicles like cars into Australia from the U.S. can still however be a complicated process, and you can expect turnaround time to be anywhere between 28 and 50 days. The Department of Infrastructure lists eight steps to importing a vehicle into the country, and this includes ensuring the vehicle is import-eligible, applying for a Vehicle Import Approval, arranging shipping, obtaining customs clearance as well as meeting any import approval conditions.
Machinery (including manufactured goods such as computers) is an excellent choice to import from the United States, having generated approximately US$4.5 billion in U.S. exports to Australia. These include manufactured goods such as computers, heavy machinery like excavators and bulldozers, refrigerators, air conditioners and elevators. The Australian demand for turbojets also spiked significantly, increasing by about 13 per cent in 2019 compared to the previous year.
Let’s take a closer look at heavy machinery. From the United States, it may take approximately 40 days for heavy machinery to enter into Australia. You’ll need to check to see if an import permit is required (or perhaps vehicle import approval) and also be mindful of biosecurity requirements. If you’re importing second-hand machinery, it’s likely to contain some degree of soil or animal/plant material. If it’s contaminated with that material, there’s a risk that your machinery will be seized by biosecurity officials and taken back to the United States. Always take care when importing such high-value equipment.
#3 Optical and medical instruments
Australia relies heavily on imported medical instruments and equipment, especially from the United States. Optical and medical instruments accounted for US$2.3 billion in exports to Australia in 2018. There has always been consistent demand in Australia for these goods, with approximately 80 per cent of Australia’s medical devices being imported.
Importers can benefit a great deal by importing these products. A market report released in September 2020 suggests that surgical and medical instruments are in fact the fastest growing portion of the Australian medical device market, with a growing compounded annual growth rate of 10.23 per cent over the report’s forecast period. Not to mention, there’s also no customs duties payable when importing medical instruments.
You will, however, need to keep a close eye on the regulations enforced by the Therapeutic Goods Administration when importing and supplying medical devices.
#4 Electrical machinery
Electrical machinery also makes our list, which generated approximately US$2.2 billion in U.S. exports to Australia (and also has no customs duties if you’re looking to import them into Australia, thanks to AUSFTA). Electrical equipment provides a vital role in the lives of everyday Australians – the mobile phone alone being the top piece of electrical equipment out of all electrical equipment imports in 2018 – and so, for an importer, there are plentiful opportunities to tap into this market.
Aviation is a big business, with the export of aircraft to Australia from the U.S. generating approximately US$2.2 billion in export revenue in 2018. This includes craft such as aeroplanes, helicopters and spacecraft. Due to AUSFTA, importing aircraft from the U.S. attracts little (if any) customs duties.
It’s critical that, when importing an aircraft, you get it thoroughly inspected by a licensed aircraft maintenance engineer (LAME) before closing the deal – this will involve looking at log books and maintenance records to ensure the plane is airworthy and in good condition. It’s also essential to ensure that the exporter you’re buying from has good title to the aircraft to avoid any disputes over ownership down the track.
Final tips – know your shipment
There are some critical things you’ve got to know when importing from the U.S. (indeed, from any country).
- Always make sure your imports aren’t prohibited – you can read more about this on our prohibited imports article;
- Always check DFAT’s Free Trade Agreement Portal to see if you need to pay any customs duties – whilst AUSFTA removed most, it’s always prudent to make sure;
- Always make sure you’re aware of biosecurity requirements, including whether you need an import permit; and
- Engage a professional freight forwarder to ensure you don’t fall into any unexpected traps.
Importing goods into Australia carries a lot of risk, especially if the value of your shipment is substantial (think: one aircraft alone can cost millions of dollars).
Our friendly import experts at International Cargo Express have decades of experience assisting businesses navigating the tricky landscape when importing products across the Pacific.
If you’ve got any questions about the process, what advantages there are for you, or if you’d like to know more than just the 5 products to import from the U.S. to Australia we’ve listed above, give us a call and we’d be more than happy to chat.
or call us on 1300 227 461