5422.0 - International Merchandise Trade, Australia, Sep 1999
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 19/11/1999
Page tools:
 Print Page
 Print All
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Feature Article - Australia's Merchandise Trade with the Republic of Korea
(This article is taken from International Merchandise Trade Australia, September Quarter 1999, ABS Cat. Number 5422.0) AUSTRALIA'S MERCHANDISE TRADE WITH THE REPUBLIC OF KOREA INTRODUCTION This article examines the growth in merchandise trade between Australia and the Republic of Korea (subsequently referred to as Korea) over the period July 1989 to June 1999. It analyses the trade flows between Australia and Korea and the importance of this trade for Australia in terms of the various commodities exported and imported. An update on performance in the September quarter 1999 is also included. The statistics are presented on an international trade basis (rather than a balance of payments basis) and are classified according to the Standard International Trade Classification Rev. 3 (SITC). TOTAL TRADE FLOWS BETWEEN AUSTRALIA AND KOREA Tables A (exports) and B (imports) show the value of Australia's trade flows with Korea by broad commodity for the 10 years to June 1999. Table C shows the proportion of Australia's world wide exports and imports that are traded with Korea, and the excess of exports over imports (the balance of merchandise trade) for each of the 10 years. Data are shown on a financial year basis.
TABLE C: AUSTRALIA'S MERCHANDISE TRADE AND TRADE SHARE WITH THE REPUBLIC OF KOREA
Over the past 10 years Korea's importance to Australia as an export destination has increased marginally from 6% to 7% of Australia's global merchandise exports, although the share has fallen off in the past two years. Over the same period its share of Australia's imports doubled from 2% to 4% (see Table C). Between 1989–90 and 1998–99 the value of Australia's total trade (exports plus imports) with Korea increased by 158% from $3,954 million to $10,214 million, and Korea's share of Australia's total trade rose from 4% to 6%. Australia's total exports increased by 75% over the period while our exports to Korea increased by 134%. Similarly, while total Australian imports increased by 90%, imports from Korea increased by 211% (see Graphs 1 and 2). Korea was Australia's third most important export destination behind Japan and the United States for most of the ten year period, except during the period 1994–95 to 1996–97 when exports to Korea exceeded exports to the United States (see Graph 3). Over the last ten financial years, Korea increased in importance as an import supplier to Australia. It peaked as Australia's sixth largest import supplier in 1997–98 before declining to seventh position in 1998–99 (see Graph 4). From Korea's perspective, Australia is more important as an import source than an export destination. In 1998–99, Australia was the destination for only 2% of Korea's exports and the source of 5% of Korea's imports - a small increase over the corresponding percentages for 1989–90 of 1% and 4% respectively. 1 AUSTRALIA'S BALANCE OF TRADE WITH KOREA Australia has recorded merchandise trade surpluses with Korea in each of the last 10 financial years. The surplus grew progressively from $1,446 million in 1989–90 to $4,584 million in 1996–97 before declining to $2,426 million in 1998–99, due largely to reduced exports of non-monetary gold from Australia (see Graph 5). As a proportion of the value of total merchandise trade (exports plus imports) between Australia and Korea, the trade surplus with Korea increased from 37% in 1989–90 to 47% in 1991–92, before declining to 40% in 1992–93. The surplus subsequently peaked at 49% in 1995–96, but then declined to 24% in 1998–99 (see Graph 6). The continuing trade surplus with Korea contrasts with Australia's persistent trade deficit with the rest of the world since 1994–95 (see Graph 5). Expanding trade deficits with the United States of America and the European Union have been only partially offset by surpluses with Korea and Japan (see Graph 7). SEPTEMBER QUARTER 1999 UPDATE In the September quarter 1999, Australia's merchandise trade surplus with Korea was $537 million, a decrease on the surplus of $633 million recorded in the June quarter 1999 and an increase on the surplus of $465 million recorded for the corresponding quarter in 1998. The fall in the surplus since the June quarter 1999 is the result of a decline in Australia's total merchandise exports to Korea (mainly non-monetary gold, coal and metal ores). Between the September quarter 1998 and September quarter 1999, exports to Korea declined by 12% - from $1,606 million to $1,412 million, while imports from Korea decreased by 23% - from $1,141 million to $875 million (see Graph 8). COMMODITY ANALYSIS OF TRADE WITH KOREA Tables D and E show Australia's trade flows with Korea for the two financial years 1989–90 and 1998–99 for selected major commodities, the share of total trade with Korea represented by each commodity in 1989–90 and 1998–99, and the proportion of Australia's world wide trade in each of the major commodities traded with Korea. Some of the data in Tables D and E are affected by confidentiality restrictions. In making comparisons at the commodity level it should be noted that, in Australia's international trade statistics, confidential commodity data are not reported against the commodity, but rather are classified to combined confidential items of trade (SITC 98). While confidentiality restrictions do not affect total import and export statistics, they do affect data comparability at the commodity level. In particular it should be noted that Australia's export commodity statistics with Korea are affected by confidentiality restrictions. TABLE D: REPUBLIC OF KOREA'S IMPORTANCE TO AUSTRALIA AS A DESTINATION FOR SELECTED MERCHANDISE EXPORTS
TABLE E: REPUBLIC OF KOREA'S IMPORTANCE TO AUSTRALIA AS A SOURCE OF SELECTED MERCHANDISE IMPORTS
EXPORTS In 1998–99 non-monetary gold (SITC 97) was the largest commodity by value exported to Korea. Australia's exports of non-monetary gold to Korea grew steadily for most of the period from 1989–90, so that by 1996–97 the value of exports had reached $2,502 million (see Graph 9), at which time Korea became our most important destination for this commodity. Much of the growth occurred "in response to restrictions on foreign exchange trading laws in South Korea which have encouraged arbitragers to re-export gold to profit from the difference between South Korean interest rates and international borrowing costs"2. This continued at a reduced level into 1997–98 (see imports commodity analysis for more details) but by 1998–99 "moves in South Korea to disallow such schemes, and the heightened risk of foreign exchange losses (with the large depreciation of the won)"3 had significantly affected demand for gold with Australian exports declining to $1,097 million. In 1989–90 and 1998–99 crude materials (SITC 2) was the largest group of commodities by value exported from Australia to Korea. In 1998–99 exports of crude materials accounted for $1.4 billion (22%) of Australia's exports to Korea - up 79% on the $789 million (29%) in 1989–90, but down on the approximately 30% share achieved in the early 1990's. The largest component of SITC 2 is iron ore and concentrates (SITC 281). The value of Australia's iron ore exports to Korea rose from 1989–90 to 1992–93 but fell between 2% and 6% over the following three years due to lower global iron ore prices. While exports of iron ore to Korea increased slightly in 1996–97, these exports rose 13% to $480 million in 1997–98 and a further 17% to $561 million in 1998–99 (see Graph 10). For most of the period Korea was the third most important destination for Australia's iron ore exports, behind Japan and China. While export statistics for iron ore are affected by confidentiality restrictions during the years 1989–90 and 1990–91, the data for the years from 1991–92 include the value of iron ore exports to Korea. Ores and concentrates of base metal (SITC 287) were the next largest export to Korea in the crude materials group, having increased from $190 million in 1989–90 to $293 million in 1998–99. While the value of exports of base metal ores dropped below $190 million for all years until 1998-99, some ores (principally manganese, rutile, ilmenite, leucoxene and zirconium) which would otherwise be classified to SITC 287 are included in combined confidential items of trade (SITC 98) for some or all of the period. The next largest export to Korea within the SITC 28 group is copper ores and concentrates (SITC 283) with exports rising from $0.4 million in 1989–90 to $126 million in 1998–99. Korea increased its market share of Australia's exports of copper ores from 0.2% in 1989–90 to 13% in 1998–99 at which time it ranked fourth behind Japan, India and China as an export destination for these goods. The second major category of Australian exports to Korea is mineral fuels and lubricants (SITC 3) which increased in value in each successive year from $526 million in 1989–90 to $1,420 million in 1996–97 but declined to $1,333 million in 1998–99. In 1989–90 these exports made up 19% of total Australian exports to Korea, while by 1998–99 they had grown to 21% of Australia's exports to Korea. Korea's importance as a market for exports of Australian mineral fuels and lubricants (SITC 3) grew over the ten year period. In 1989–90, 6% of total Australian exports of this commodity were to Korea and in 1998–99 the percentage share had increased to 9%. Coal, not agglomerated (SITC 321) has been the main export under mineral fuels and lubricants (SITC 3) throughout the ten year period. The value of coal exports to Korea climbed steadily from $489 million in 1989–90 to $930 million in 1993–94. In subsequent years the value fluctuated due to variations in $US contract prices while the quantity increased progressively until 1998–99. In 1998–99 the value and volume of coal exported to Korea fell due to reduced demand for Australian coal, as a result of the Asian economic crisis (see Graph 11). However it should be noted that since July 1995 exports of semi-soft coking metallurgical coal to Korea have been subject to confidentiality restrictions and are now included in combined confidential items of trade (SITC 98). In 1994–95 metallurgical coal exports to Korea were valued at $176 million. Throughout the ten years Korea has been the second largest market behind Japan for Australian coal. Australian exports of coal to Korea accounted for 11% of our world wide exports of these goods in 1998–99, up from 8% in 1989–90. Another important export to Korea within SITC 3 is crude petroleum oil (SITC 333) with exports rising strongly from $23 million in 1989–90 to $246 million in 1998–99 (see Graph 12). This represents 4% of Australia's exports to Korea and 15% of Australia's worldwide exports of crude petroleum. By the end of the decade Korea was the fourth most important export destination for this commodity behind United States, Taiwan and Japan. Exports of machinery and transport equipment (SITC 7) to Korea increased in each year to 1997–98 before declining in 1998–99. The major commodity in this group is internal combustion piston engines (SITC 713) with Korea being Australia's principal market. In 1989–90 exports of these engines were worth $4 million, representing less than 1% of Australia's exports to Korea. By 1997–98 exports of internal combustion piston engines had risen to a high of $269 million before declining to $129 million in 1998–99, representing 4% and 2% respectively, of Australia's exports to Korea (see Graph 13). The decrease in exports of engines during 1998–99 was largely due to a decline in automotive production in Korea as a result of the Asian economic crisis. The value of exports of food and live animals (SITC 0) to Korea is affected by confidentiality restrictions over the ten years to 1998–99. Exports of sugar, wheat and lupins which would otherwise be classified to SITC 0, are included in commodities and transactions not classified elsewhere (SITC 9) for part of the ten year period. Wheat exports to Korea (which amounted to $149 million in 1990–91) are excluded from SITC 0 from December 1991 onwards, and exports of lupins (which amounted to $17 million in 1992–93) are excluded from July 1993 onwards. Sugar exports are excluded up until January 1996, and again from August 1997. The $483 million recorded for SITC 0 for 1996–97 includes sugar exports of $243 million. IMPORTS Since 1992–93 the largest group of commodities by value imported into Australia from Korea is machinery and transport equipment (SITC 7). Imports of these goods accounted for 47% of Australia's total imports from Korea in 1998–99, having grown from 29% in 1989–90. Korea was the sixth most important source of Australia's total imports of machinery and transport equipment in 1998–99. The largest single component of this group is road vehicles (SITC 78). Between the years 1992–93 and 1997–98 there was a dramatic increase in the value of imports of road vehicles from Korea. In 1997–98 imports were $977 million representing 26% of Australian imports from Korea, a thirteen fold increase on the 1989–90 level of $69 million (or 6% of imports from Korea). As a source of Australia's worldwide imports of road vehicles, Korea's share increased from 1% in 1989–90 to 9% in 1997–98. Within the road vehicle group, imports of passenger motor vehicles (SITC 781) are the most significant single component. Imports of passenger motor vehicles grew between 1992–93 and 1997–98, before declining to $641 million the following year. The increase can be attributed to: imported passenger motor vehicles replacing locally manufactured vehicles (from 1990 the number of car models manufactured in Australia decreased from eight to five)4; growth in demand for smaller, cheaper cars such as those manufactured in Korea and Japan; and aggressive marketing by Korean companies which led to an increase in Korea's share of Australia's passenger motor vehicle market. The decline in 1998–99 can be attributed to both the economic crisis in Korea and an oversupply of Korean made passenger motor vehicles in Australia (see Graph 14). In 1998–99, passenger motor vehicles accounted for 16% of Australia's total imports from Korea (down from 32% and 25% in 1996–97 and 1997–98 respectively). Korea accounted for 10% of total Australian passenger motor vehicle imports in 1998–99 (down from 17% and 15% in the 2 previous financial years) (see Graph 15). Imports of telecommunications and sound apparatus (SITC 76) from Korea rose by 271% over the ten year period, from $130 million in 1989–90 to $482 million in 1998–99. Imports of these goods from Korea increased from 10% of our total Korean imports in 1989–90 to 12% in 1998–99. An increasingly important component of telecommunications and sound apparatus (SITC 76) over the ten year period was telecommunications equipment not elsewhere specified (SITC 764), mainly cellular mobile telephones. Since 1994–95 imports of this equipment have contributed more than half of the value to imports of telecommunications and sound apparatus (SITC 76). By 1998–99 imports of telecommunications equipment not elsewhere specified (SITC 764) had increased to $375 million, a fourteen fold increase on the value in 1989–90. Korea is now the third most important import supplier of these products after Japan and the United States (see Graph 16). Australia's imports from Korea of goods in the category commodities and transactions not classified elsewhere (SITC 9) have shown the most dramatic increase over the ten year period. Most of the growth occurred in 1997–98 and 1998–99 and was largely driven by imports of non-monetary gold (SITC 97), which increased from only $31 million in 1996–97, to $678 million in 1997–98 and $859 million in 1998–99 (see Graph 17). Much of the increase is due to gold that was initially exported from Australia to Korea, rolled into plate in Korea, and returned to Australia for processing into bullion and subsequent export. This situation arose out of attempts by Korean authorities to control arbitrage driven gold import-export schemes, previously undertaken by Korean trading houses, by requiring gold to be value added when shipped through Korea.5 Non-monetary gold (SITC 97) imports grew from a negligible share of total Australian imports from Korea and total gold imports in 1989–90, to 22% and 37% respectively in 1998–99. Korea was the major source of Australian non-monetary gold imports for 1997–98 and 1998–99. CONCLUSION Over the ten financial years to 1998–99, Korea became increasingly more important as a trading partner for Australia. Korea's share of Australian exports of non-monetary gold, coal, petroleum and internal combustion piston engines all increased over the period, with the largest percentage increase being in internal combustion piston engines. In terms of Australia's imports from Korea, the main increases were in passenger motor vehicles, telecommunications equipment and non-monetary gold, with non-monetary gold showing the largest percentage increase. While Australia has maintained a trade surplus with Korea for the entire period, the surplus fell from 1997–98 due largely to the impact of the Asian economic crisis on Australia's exports to Korea. FURTHER INFORMATION The statistics in this article have been sourced from ABS publications and other detailed data available at the ABS. Clients interested in obtaining more details about Australia's trade with Korea or about other aspects of Australia's international merchandise trade can contact ABS Client Services on (02) 6252 5400. FOOTNOTES 1 Monthly Statistics of Korea, July 1999, National Statistical Office Republic of Korea, pp 207-215 2 Australian Commodities Forecasts and Issues, vol. 5, no.1, March 1998, ABARE, Canberra, p 54 3 ibid 4 State of the Australian Automotive Industry 1997, 1998, DISR, Canberra, pp 117-119 5 Australian Commodities Forecasts and Issues, vol. 5, no.3, September 1998, ABARE, Canberra, p 354 REFERENCE LISTABARE 1998 Australian Commodities Forecasts and Issues, vol. 5, nos 1-3, Canberra. Commonwealth Department of Industry, Science & Resources 1998 State of the Australian Automotive Industry 1997, Canberra. International Energy Agency, OECD, 1998, Energy Prices and Taxes, 3rd Quarter 1997, OECD, Paris, France. National Statistical Office Republic of Korea 1990, Monthly Statistics of Korea 1990.7, vol.32, no.7, 31 August 1990, National Bureau of Statistics, Economic Planning Board, Seoul, Korea. National Statistical Office Republic of Korea 1999, Monthly Statistics of Korea 1999.7, vol. 41, no.7, 28 July 1999, National Statistical Office, Taejon, Korea. World Gold Council 1999, Gold Demand Trends Issue No.28 August 1999. The ABS would like to acknowledge the assistance provided by staff of the North East Asia Branch of the Department of Foreign Affairs and Trade. Document Selection These documents will be presented in a new window.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
