Andrew McKellar is the chief executive officer of the Australian Chamber of Commerce and Industry

The turbulence is being felt by Australia’s business sector as well.

In this year’s ACCI National Trade Survey, more Australian businesses indicated that they are trading with the United States than with any other trade partner including, for the first time, China.

This shift to the United States is a reflection of the strong and stable trade and investment relationship between our two countries. It remains to be seen whether this is a new trend or an exceptional case following our time in China’s diplomatic and commercial freezer.

China will remain an important trade partner for Australian businesses. The fundamentals of our respective economies guarantee this. But there are lessons to learn from the experiences of the recent past.

Australian trading businesses have learnt – some the hard way – that there is a vulnerability in being too reliant on a single trade or supply chain partner. As with any portfolio, overexposure bears a risk.

We do not have the option not to trade. But we do have options in how we confront these challenges.

It is encouraging that businesses, not only in the CBDs of our capital cities, do precisely that.

This year’s survey shows Australian businesses understand these issues not as abstract concepts but as day-by-day, bread-and-butter commercial realities.

Most Australian trading businesses (71 per cent) considered the need to diversify markets a concern, and almost as many said the same of geopolitical tensions (60 per cent).

Faced with international market risks, businesses report increasing marketing into new or existing markets, finding domestic markets, or developing new products.

Governments have a significant role to play in encouraging this diversification, but it is ultimately up to businesses to take the practical steps to achieve that outcome.

Indeed, the findings in the survey suggests that Australian trading companies are highly active in seeking new customers and markets to help manage this market risk.

However, when it comes to managing the risks of supply chain disruptions, the options appear to be more limited, with a majority of companies simply opting to pay more for the services that they require.

It’s therefore not surprising that in this year’s survey yet again, international competitiveness remains the leading concern of Australian trade businesses.

That said, there is a real question about the extent to which Australian businesses are practically taking advantage of the network of trade agreements that they presently have access to.

A consistent finding across this and five earlier trade surveys is that trade agreements are not well understood by many businesses. While agreements such as the China-Australia free trade agreement are better understood, familiarity with newer bilateral agreements is more mixed.

Understanding of the usefulness of large multilateral agreements – such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement on Trans-Pacific Partnership – are also lagging behind. Understanding and accessing the benefits of these existing agreements is clearly an area with upside potential.

One of the greatest pain points identified by businesses in our survey is that they do not have enough information on how to trade in international markets.

Both business and government need to work together to drive greater utilisation of these existing pacts to achieve meaningful economic outcomes that strengthen Australia’s economy and create jobs. Australia’s business groups, industry associations, and the government must work together to drive this engagement.

Skills shortages represents another barrier. The persistent shortage of skilled labour highlighted in a report by Jobs and Skills Australia earlier this month is one place where the focus should be renewed. This is certainly a strong area of engagement between business and government.

Beyond our trade agreements, it is clear to our chamber network in every state and territory that Australian businesses are finding partnerships worldwide, trading with over 160 countries this year alone.

Business must show proactivity in engaging and deepening trade ties with these markets. It will contribute to our efforts towards diversification.

Finally, securing our supply chains is of crucial importance. 90 per cent of respondents identified that they suffer from shipping and logistics challenges, with customs and border crossing costs the second highest concern.

In light of this, ensuring that the government’s $414m investment in the Simplified Trade System reforms delivers a tangible dividend to trade businesses is another. We must keep pace with international developments if we are to remain competitive, including learning from the experiences of our partners in the International Chamber of Commerce.

Making our way in this more complex trade environment will require us to learn the lessons of our recent past and commit to doing what is necessary to meet these new challenges.

It will not be easy, but it is nevertheless vital.

Published in The Australian on October 17, 2023