10/05/2018
French President Emmanuel Macron’s visit to Australia in early May is a curiosity. The trading relationship between our two countries is minor. It’s surprising that it warranted a visit from a French President.In this context, it is salutary to examine the trading relationship between Australia and France.
The first port of call for trade statistics is Composition of Trade Australia. What do we find? In 2016–17, exports to France constituted 0.6 per cent of Australian goods and services exports; imports from France constituted 1.8 per cent of Australian goods and services imports. These are relatively stable percentages (save for one category … aircraft).
Australia’s imports of French goods and services in 2016–17 totalled $6640 million of Australia’s total imports of over $362 billion. That total put France in 13th place. Seven of the 12 countries above France are Asian countries, and India and Vietnam are about to overtake France on the list.
In 2016–17, merchandise exports to France totalled $1425 million, whereas merchandise imports from France totalled $4576 million – the balance heavily in France’s favour.
What of the character of merchandise trade? Coal makes up half of Australia’s exports. This category probably comprises mostly metallurgical coal – for steel-making. Add oil seeds and oleaginous fruits (escalating in the last five years), and the two categories make up two-thirds of exports. Dig it up or grow it and ship it out unprocessed – Australia’s ‘comparative advantage’?
However, the bulk of the remaining 20 top three-digit categories of exports constitute elaborately transformed manufactures (ETMs) – such as aircraft and parts, measuring instruments, telecom equipment, etc. – albeit in small value totals.
The top three categories of imports from France are medicaments (part of the larger pharmaceutical grouping), perfumery and cosmetics, and alcoholic beverages. Even then, these categories constitute only one-quarter of French imports, highlighting that imports in value terms are widely distributed.
France has a peculiar export character. Luxury goods are a specialty – hence perfumery and cosmetics ($358 million), bags and travel goods ($140 million) and jewellery ($100 million). Add wine, naturellement (over $350 million).
France is a major agricultural export nation but such trade with Australia is specialised. There are no foodstuffs in the top 20 3-digit categories, but DFAT’s pivot tables provide more detail. Foodstuffs (minus animal feed) imports total $193.6 million, 4 per cent of total imports from France.
The French hi-tech company Thales has a significant presence in Australia, having completed purchase of the privatised Australian Defence Industries in 2006. Thales Australia and the EADS-owned Australian Aerospace would be responsible for considerable sums of both imports and exports of ETMs.
ETMs are well represented in the top 20 categories of imports from France. Passenger motor vehicles is not in the list. By contrast, German autos constitute one-quarter of total merchandise imports from Germany of $13,558 million. A decade ago, Australians imported over $200 million French autos annually, but the quantum has since plummeted. Australian purchasers of French autos are now a select hardy bunch, attracted not least by the cultural cachet. However, the drop has been partially offset by a dramatic rise in goods vehicles imports.
Country trade tables have a “confidential items” category – since 2009, including aircraft. Thus in 2014–15, confidential imports from France totalled a whopping $494 million – evidently the bulk constituting of Airbus aircraft.
Services constitute another dimension of France’s peculiar capacities. Australia’s services imports from France recently totalled around $2 billion, whereas Australian exports totalled around $900 million. The French import figure would include finance (BNP Paribas), utilities (Veolia, Transdev) and tourism expenditure in France.
France has recently suffered dramatic de-industrialisation. One domain that has escaped this diminution is military armaments production. French exports of military aircraft, etc., have exploded in recent years. Given that numerous purchasing countries have appalling human rights records, successive governments have come in for much criticism. Presumably the potential sale of submarines to Australia will escape this condemnation.
Thus, this specific affair will be of particular interest to a French President. The 12-submarine contract, presently estimated at over $50 billion, is a bonanza for France. But it has been politically driven in Australia, not least with the South Australian economy in mind.
One can reasonably predict that the problems that have arisen from day one will be multiplied indefinitely. Some critics think that the project in itself is a grand folly. What is certain is that the submarine contract is certain to dominate the Australia-France economic and diplomatic interchange for the near future.