Canada-Australia Commerce: Enhancing the Relationship
A Report for the Canadian Council of Chief Executives, 2012
81 Pages Posted: 3 May 2012 Last revised: 22 Sep 2014
Date Written: April 25, 2012
Canada and Australia are highly similar economies in terms of size, wealth, governance structures, most observable socioeconomic characteristics, and resource endowments. Reflecting this, their patterns of revealed comparative advantage in international trade are highly similar. At the same time, they are amongst each others' most distant trading partners. This study demonstrates that similarity and distance systematically favour services over goods trade and commercial presence/vertical investment over cross-border trade. Based on this, the study explores the potential to expand bilateral trade and investment, including computable general equilibrium simulations of the impact of tariff elimination and services trade liberalization. The study also examines the possibility of Canada and Australia leveraging the similarities in their economies, their societies and their governance system, as well as the high degree of confidence earned by years of close and sustained inter-agency cooperation, to create a virtually seamless economic space for the movement of goods, services, capital and labour bilaterally in the context of a broader trans-Pacific trade agreement.
Keywords: Canada, Australia, trade liberalization, computable general equilibrium simulations
JEL Classification: F14
Suggested Citation: Suggested Citation