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By Dani, Bronte, Britt, Ruby, Steph International trade creates links between countries through the export and import of goods and services. Australia has a complex pattern of trade links that has changed over time as our export base has broadened and diversed.
 * __TRADE __**

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Australia has always been a trading nation. Its political, immigration and cultural links with other countries have been reinforced by international trade and investment, with its high reliance on imports such as electrical appliances, cars, clothes, footwear, PCs and watches being a reminder of these trade links. The influx of imported products has benefited Australia but in recent decades, the reliance on them has caused problems for its economy. Such problems have included trade deficits, whereby the value of imports has exceeded that of exports by between $12 and $20 billion each year. They also include foreign debt in money owed overseas, which has increased from roughly $19 billion to $527 billion since the 1980s, as well as causing unemployment. The increasingly complex pattern of Australia's trade links and the broadening of its export base reflect the attempt at tackling these ongoing problems. Although Australia relies heavily on its overseas foreign investment and employers, with hundreds of foreign companies operating in Australia, it is also a high exporter of goods, services and capital, with most of its exports going to markets in South-East Asia. Agricultural goods and minerals dominate Australia's exports, as do some of its service firms such as Qantas which is well known overseas. This chapter will explore Australia's trade links in its membership of international trading blocs and agreements, its shift away from its traditional trading partners such as Britain, and the types of goods exported.

The composition and direction of Australia's trade
For many years, Britain was Australia's major trading partner, with its purchase of Australian farm products and supplies to Australia of consumer goods. Britain's trade with Australia has declined since the 1960s, so that it now ranks sixth behind Australia's top five trading partners, which are Japan, the United States, China, New Zealand and South Korea. Australia still exports primary products such as minerals, wheat and fruit to Britain and other western European countries despite the decline in trade. However, Japan has become Australia's largest trading partner with its importing of Australian wool and minerals such as coal and iron ore. Japan, the United States and China have further replaced Britain as Australia's main sources of major import items such as passenger motor vehicles, crude petroleum, freight services and computers.

Global trading blocs and agreements
The integrated nature of the world's economy has made it essential for Australia to engage in dialogue with other countries on trade issues. Australia does this through its bilateral and multilateral negotiation of free trade agreements and the establishment of trading blocs. Trading blocs may restrict the size of Australia's potential export market, but such barriers are to some extent broken by bilateral free trade agreements. Australia's government aims to negotiate several free trade agreements, in particular with the United States and Thailand, strengthen trade and economic relations with Japan, Korea and China, and to assist the //Asia-Pacific Economic Cooperation// (APEC) group in facilitating trade and corporate governance. The following organisations and trading blocs, both regional and global, affect world trade and are therefore of concern to Australia.

‍ Foreign investment
A high level of foreign investment into Australia has allowed faster development of its domestic resources. In 2003, foreign investment into Australia reached $904.4 billion, up by $47.4 billion or 5.5 per cent on the previous year, with direct investment rising 8.4 per cent to $233.5 billion. Australia's government has a regional headquarters program aimed at encouraging global companies to establish regional bases in Australia by stressing its economic strengths, cultural diversity and stability. Such investors with a regional base in Australia include American firms, Dow Chemical, Hewlett Packard and Microsoft, the Finnish firm, Nokia, and German firm, Siemens.