This chapter examines how the trade and investment relationship between Australia and the Asia-Pacific nations has been evolving over the past decades. The chapter also reflects on the gradual shift of trade and diplomatic relationships in this region since the outbreak of the COVID-19 pandemic. The ongoing global pandemic has not only been disrupting the global economic and geopolitical environment but also reshaping the trade relationship in the region. The chapter explores the greater trade and investment opportunities between Australia and South Asia with a special emphasis on the increased potential bilateral trade partnership with Bangladesh. Following the neoclassical comparative advantage theories, this study suggests that long-run economic benefits and synergies can be enhanced by utilising the ample trade opportunities created by the COVID-19 pandemic to achieve numerous UNSDGs. Therefore, strengthening further trade and diplomatic alliances between Australia and Bangladesh will be mutually beneficial and generate positive growth and development effects for both countries.
TopIntroduction
Australia’s uninterrupted annual average growth above 3% over the last three decades with strong economic fundamentals made the country significant among the developed nations. Although Australia has been maintaining its longstanding common democratic values, diplomatic, security, trade and investment relationship with Europe and America since the beginning of the 20th Century, however, it has established close economic relationship with countries in the East, mainly with Asia-Pacific nations over the last three decades. The growing demand for Australian mineral resources, agricultural products, education and tourism from the high-growth Asia-Pacific countries made Australia change its trade and investment focus gradually towards the region over the last three decades. China accounted for 33% of all Australia’s trade in 2020, which is more than its combined trade with Japan, South Korea, the US and India (Australian Bureau of Statistics (ABS), 2020). Nonetheless, the current diplomatic and trade tensions between Australia and some of its significant trade partners, especially with China on security and COVID-19 origin inquiries and the recent Australia-France rift over the $90 billion submarine deal have brought opportunities for the South Asian countries to strengthen the trade and diplomatic relationship with Australia.
This chapter discusses Australia’s gradual shift in international trade and investment focus towards the Asia-Pacific countries from its traditional allies of the United States (US) and United Kingdom (UK) and other Western countries since the early 1990s. The chapter further explores the trade relationship between Australia and South Asian countries and focuses on the existing and potential trade prospects between Australia and Bangladesh, especially after the COVID-19 pandemic.
South Asia1 is the home of almost two billion or one-fourth of the world’s population and one of the significant two-way trade partners of Australia. Given the current regional geopolitical disquiet, it would be advantageous for Australia to proactively strengthen its trade ties with the South Asian nations who are rapidly becoming emerging markets. South Asian countries have also established regional cooperation since the middle of the 1980s, which is commonly known as the South Asian Association of Regional Cooperation (SAARC). Among the South Asian countries, Bangladesh is one of the most emerging countries with its vast consumer market, rising middle-income people, large young working-age population.
Bangladesh had one of the fastest-growing gross domestic product (GDP) of over 8% in 2019 and was the best-performing country among the 46 countries in the region until September 2020. Asian Development Bank (ADB) has predicted remarkable growth for Bangladesh economy in the Asia-Pacific region in 2021 followed by Maldives, India and China (The Business Standard, 2021). Apart from the economic sector, Bangladesh has progressed significantly in other socio-economic measures and achievement of the UN Millennium Development goals over the past few decades. While there are huge potentials for expansion of bilateral trade and investment between Australia and Bangladesh, there also exist some challenges. These challenges lie mostly on the non-alignment of priority trade and investment areas which need to be addressed and improved through close coordination between these countries.
The demand for Australian products are growing in recent years and the exports from Bangladesh to Australia are also increasing at a faster rate. Bangladesh can further avail the opportunity to enter into the Australian market with its comparative advantage in labour-intensive products, especially in ready-made garments (RMG), pharmaceutical products, light engineering products, jute and leather items as well as information communication technology (ICT) related products and services. Further collaboration between sectors such as Education (i.e., Technical and Further Education or TAFE, Universities), Science and Technology (i.e., Commonwealth Scientific and Industrial Research Organisation or CSIRO), energy sector and primary and construction industries (agricultural mineral resources and infrastructure development) can add value to the effort for greater economic collaboration between the countries.
The recently signed Trade and Investment Framework Arrangement (TIFA) between Australia and Bangladesh would further strengthen and expand the trade and investment opportunities between these two countries (Shams, 2021). Having access to Bangladesh’s market of 165 million people and assisting to increase the capacity building of the nation will be mutually beneficial in the long run for Australia and Bangladesh.