Australia’s new trade agreement with Japan is good news for the economy but it’s too early to say how consumers will benefit, economists say.

The agreement with Australia’s second largest trading partner will be good for consumers, jobs and prosperity, Prime Minister Tony Abbott has said.

Japanese whitegoods, electronics and cars would become cheaper in Australia, according to the government, with about $1500 expected to be shaved off the price of an average vehicle.

However CommSec chief economist Craig James said it was unlikely car dealers would drop the price of their cars, but they may provide consumers with better value for their money.

“Car dealers don’t like to cut the price of a car because if you reduce the price of a new car by $1,500 it affects the resale value of all cars,” Mr James said.

“But you might get a better stereo system or air conditioning system or reversing cameras – you might get the extras.”

Mr James said it was too early to know what effect the agreement would have on the economy, because the gains would be staggered over time.

“Anything that reduces the barriers to trade between two countries has got to be positive,” he said.

HSBC Australia chief executive Tony Cripps said the deal further secured Australia’s economic growth, paving the way for stronger trade links between the two countries.

“Japan is already Australia’s second largest two-way trade partner, receiving 19 per cent of Australia’s goods exports and eight per cent of imports, and our fourth largest investor accounting for 11 per cent of our foreign direct investment,” Mr Cripps said.

“It will provide both countries the opportunity to further develop their comparative strengths and market share in either market in areas such as beef and liquefied natural gas exports for Australia and high-end manufacturing exports for Japan.”

AAP