Australia And Free Trade Essay

2571 words - 10 pages

Australia and a future in preferential tradeBy Sian ZhangThe common belief among economists is that the liberalization of global trade markets through the removal of trade barriers yields greater efficiency in the use and allocation of resources, and therefore improved living standards. Australia is a nation that has gone to great lengths to promote trade liberalization, evidenced by the country's unilateral reduction of trade barriers since the 1980's, and the negotiation of free trade agreements (FTAs), or more precisely, preferential trade agreements (PTAs). FTAs are multilateral in nature, encompassing majority of global nations. Such agreements are mediated through the World Trade Organization and negotiated at the Doha round. Current negotiations have been broken down since 2008, when constituents were unable to reach a compromise on agricultural trade-barriers. PTAs are distinct from FTAs, in that they are bilateral and regional in nature. (Brownsell , Liz, and Allen Overy , 2014) This means trade concessions reached in these agreements apply only to participating nations; hence, they operate on a preferential basis. This also means they are negotiated relatively easily due to having fewer participants, and given that multilateral trade negotiations have been stalled, the trend of PTA proliferation may continue into the future in Australia. However, trade agreements aim for the mutual benefit of its signatories. Australia must concede trade barriers in order to benefit from export concessions. Therefore it is important to consider the relative merits of PTAs to Australia, and the impacts previously enforced PTAs have had, when pursuing PTAs in the future.PTA Benefits/Demerits - Trade Balances, Capital flows and Comparative AdvantagePTAs achieve the removal of trade and capital flow distorting factors such as tariffs and quotas, causing affected trade goods to become more competitive in foreign markets, creating a degree of 'free trade'. From a trade-balance perspective Australia benefits from a PTA when it results in an increase in net exports, and therefore increased GDP. This can be best accomplished for Australia by gaining concessions for its primary, rural, manufactures and service industries, which dominate Australia's export base, constituting 90.5% of all exports, in order to maximize potential export increases. Conversely, Australia can suffer in this respect when net exports decrease. It is important however, to note that suffering a net export decrease and benefitting from a PTA in overall is not mutually exclusive.Figure 1 - Australia's Export Composition (ABS, 2014)Australia is a nation with a low-savings trend as well as a capital intensive economy due to the significance of the primary industry which requires great amounts of capital investment. Consequently, Australia is reliant on foreign investment for the creation of domestic businesses. Hence, PTAs can also benefit Australia by encouraging foreign investors to invest...

Find Another Essay On Australia and Free trade

Imperialism and Free Trade Essay

2094 words - 8 pages Imperialism and Free Trade Like many terms used with the study of empire, the term Imperialism is considerably loaded, with many negative connotations. Modern political understanding of the word often suggests an illegitimate desire to extend one’s power or authority for reasons of self-advantage, be it national or individual. The British Empire is often considered to be imperialistic, largely due to its heavy

Trade Between Australia And China Essay

1936 words - 8 pages Many products we use today are made in China. Trade between Australia and China has heightened in the last couple of years. China has one of the world’s largest economies. It has an increasing role in shaping the world economy, accounting for a third of the increase in the world’s gross domestic product and imports for the period 2000 to 2003 (The Economist 2004). It is also home to a population of 1.3 billion inhabitants, consuming a variety of

Thw WTO, Free Trade and Globalization.

907 words - 4 pages Every one of us probably seen reports or heard something about demonstrations against globalization when international organizations like the WTO meet. One example was the G8 meeting in July 2001. We have to ask us the question why there are some people who protest against globalization and also against the free trade the WTO stands for.The main complaint and concern of these groups is unfairness. They say free trade is unfair, the low wages are

The Pros and Cons of Free Trade

1107 words - 4 pages Free Trade is the ability to trade goods and services without barriers, and for prices to rise naturally through supply and demand. In theory, Free Trade was a way to break down the barriers between countries, banishing taxes and allowing prices to be naturally set through supply and demand. According to the World Trade Organization, this gives the poor countries the opportunity to specialize in the production of goods that derive from their

Pros and Cons of Free Trade

1481 words - 6 pages Geography: Pros and Cons of Free Trade Few can contend that the world is more interconnected and interrelated more than ever. This web of interdependency is primarily made possible by trade, and in the twenty-first century, a large and significant portion of trade is conducted on a global scale. Furthermore, while the majority of people agree that free trade can benefit both parties in terms of economic development and an increase in overall

Protectionism and Free Trade in America

2094 words - 8 pages The argument regarding protectionism and free trade in America can be traced back to our Founding Fathers. The first significant legislation passed by the First congress in 1789 and signed into law by President Washington on July Fourth was a protectionist tariff that provided for over 90 percent of the revenues to operate the new government and encouraged the building of industries and development of family farms. In contrast, Benjamin

Environmental Protection and Free Trade Coexisting

2721 words - 11 pages Environmental Protection and Free Trade Coexisting An important issue in the international relations of the twentieth century involves whether or not free trade and environmental protection can coexist. The goal of a free trade economy is to increase the global economy, while environmental protectors try to find ways of reversing some of the negative effects that humans have inflicted upon the earth. Because of the increasing popularity

The relationship of trade between Australia and Singapore

1255 words - 5 pages The development of trade between the two countriesAustralia and Singapore have maintained a trade relationship for a long time now. Both countries belonged to the British Empire. Singapore and Australia are both members of APEC (Asia pacific economic cooperation) and the world trade organization (WTO). Their trade relationship resulted in the Singapore and Australia free trade agreement (SAFTA) in 2003.The republic of Singapore has long been a

Free Trade in South America: Mercosur and Other Groups

1643 words - 7 pages Integration in December 1960. Costa Rica joined CACM two years later in 1962. The main agenda of CACM was to “create a free trade area among these five nations and to share insight on industry organization” (Editors). This was unfortunately hindered by “The Soccer War of 1969.” The Soccer War was a conflict between Honduras and El Salvador over economic issues that was enflamed by a semifinal for the 1970 World Cup.(Kapuscinski) Though the actual

Is free trade equally beneficial for developed and developing countries?

2417 words - 10 pages It is essential to trade between or among the countries. Free trade area is a huge market which deals with consumers from different countries. A market provides grounds for the exchange to satisfy one's desire and enriches both buying and selling parties under the agreed terms and conditions. If market is no longer demonstrate this core function the merit of exchange for both parties is significantly diminished or unbalanced.Free trade between

European Union and the North American Free Trade

3022 words - 12 pages poor economies are not allowed to use import tariffs to protect their growing industries or their farmers from floods of cheap imports. Free trade agreements also include additional rules on investment that pose a prospective threat to poor people’s access to public services. This clearly states that even though poor countries have the advantage of strength in numbers as compared to the rich economies and countries, the former are more likely to

Similar Essays

Implications And Issues Of The Australia Us Free Trade Agreement

3374 words - 13 pages 1. INTRODUCTION1.1. BackgroundOn 8 February, after almost 12 months of negotiations, Australia's Trade Minister and the United States Trade Representative announced that agreement has been reached on the main body of the text for the Australia-United States Free Trade Agreement (AUSFTA). Although yet to pass through the Australian and US domestic legislative processes that bring the 'agreed text' into effect, the agreement allows for removal of

The Wto Role In The Australia And Us Free Trade Agreement

1925 words - 8 pages (APEC 2001). This inturn stimulates growth essentially attracting investment. Australia has a low proportion of exporters and free trade would strengthen that number. Furthermore with open trade, improved financial, professional services and telecommunications would prevail and efficiency may improve with large-scale production and improved technology (APEC 2001).A free trade agreement between Australia and the US may also have negative

Question: "A Bilateral Free Trade Agreement Between The Usa And Australia Is Likely To Be Of Only Marginal Benefit To Australian Businesses." Evaluate This Statement.

2145 words - 9 pages A Free Trade Agreement (FTA) between Australia and the United States of America (USA) appears to present a unique opportunity to advance the interests of Australian business. However, to what extent would free trade benefit Australia? An FTA superficially seems to offer significant benefits to Australia in terms of employment and the expansion of Australian business internationally. However, major market access barriers face Australian exporters

Globalisation And Free Trade. Essay

2332 words - 9 pages Task 1 Comparative AdvantageThe basic model of comparative advantage is a static analysis of the production possibility frontier (PPF) curves of two countries that produce two goods. It measures the increase in output due to specialisation and trade. The model implies that free trade will benefit both countries. In the global economy, comparative advantage is dynamic and involves many countries and many products; therefore it is difficult to