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Key Topics
Australia’s Trade Policy: The Economic Impact
Introduction
The trade policy of any nation plays a crucial role in determining the nation’s economic conditions. It must be noted that a proper and appropriate trade policy is a driver for industrial growth and growth in employment, but an inappropriate trade policy can generate the reverse results. The trade policy of Australia should be considered a sound one considering its implications on the overall economic condition of the country. As the country as strong trade ties with the rest of the world, it has become easier for the country’s administration to formulate and implement a sound and effective trade policy. Australia’s trade policy has made the country capable of considering itself a major supplier to the markets in the Asia-Pacific region and this has also contributed to the success of its trade policies. The Australian government is always in support of developing effective trade policies that not only enhances the industrial growth and development but also paves the way for the improvement in employment rate. It is in the context of the appropriation and trade policy and its implementation that this paper is going to evaluate and analyze the trade policy of Australia and the policy’s impact on the Australian economy, its industries and its employment conditions.
One of the most positive impacts of the Australian trade policy on Australian economy is that it continuously strives to assist Australian domestic businesses to flourish apart from flourishing its international trade (Australian Government: Australian Trade and Investment Commission, 2017). There are certain regulations that are present to protect and safeguard the domestic industries, consumers and the environment from those harmful and dangerous goods that are imported from overseas (Australian Government: Australian Trade and Investment Commission, 2017). Some specific free trade agreements constitute a broader aspect of the trade policy of Australia. In this respect it must be noted that Australia has, at present, six Free Trade Agreements (FTAs) with some specific countries and another eight of such agreements are under negotiation (Australian Government: Australian Trade and Investment Commission, 2017). Such FTAs often have positive impact on the economic condition of the country as it welcomes foreign direct investment, set the pace for industrial growth, and pave the way for mitigation of unemployment problems in different sectors. It is noteworthy that “The FTAs contain legally binding commitments by each member to liberalise access to their markets for goods and services as well as investment” (Australian Government: Australian Trade and Investment Commission, 2017). Moreover, as a part of its trade policy, Australia has committed itself to the tariff quotas of the World Trade Organization (WTO), and this has helped the nation in export subsidies and has also provided support to its domestic agricultural products, paving the way for employment and agricultural development (Australian Government: Australian Trade and Investment Commission, 2017). Furthermore, a balanced import regulation has also rendered positive impact on the economy and industrial development of Australia. This can be argued by citing the fact that any business in Australia is able to impo0rt goods from overseas as a part of their activities and this makes it easier for entrepreneurs to pave the way for the establishment of joint ventures which eventually attracts foreign direct investment (FDI).
Positive Impact of Trade Policy
Australia is one of the 163 members so the WTO, it benefits from the most favoured nation and non-discrimination provisions in the course of engaging in international trade with other member nations (Davidson, 2018). This has rendered a positive implication on the domestic trade and industries in Australia and also ensured the flow of employment. It must be noted that as Australia has engaged in some other bilateral and regional trade agreements (which are under negotiation), there are chances that the economy would be boosted once again. One must take into account the fact that “ISDS provisions in trade agreements provide a mechanism for foreign investors (including Australian investors investing overseas) to seek recourse in an international tribunal in the event that a host government to the agreement breaches its investment obligations” (Davidson, 2018). This clause would be undoubtedly benefitting the Australian business enterprises, contributing directly to the country’s economic and industrial growth. Moreover, such would also benefit it terms of security FDI. It is noteworthy that as a part of its trade policy, the Australian Government “has set an aid for trade target that represents 20 per cent of the total aid budget by 2020, which is consistent with the level of investment by other key donors and the increasing demand from developing countries, especially in the Pacific” (Australian Government: Department of Foreign Affairs and Trade, 2018). This has paved the way for two-way benefit. Australian companies would be benefitted as well as the firms in other countries in which Australia sustains its trade. This would contribute to the promotion of trade relations between Australia and some developing nation in the Pacific region. This in turn would again contribute to the development of the economic condition of Australia and the related countries. Moreover, it must be noted that to improve the economic condition of the country and to ensure development of the industrial and agricultural sectors, the Australian Government’s aid for trade investment proposal would encompass trade facilitation along with the policy of bettering the priority areas for aid for trade (Australian Government: Department of Foreign Affairs and Trade, 2018). It would improve the country’s global value chain and industrial infrastructure (Australian Government: Department of Foreign Affairs and Trade, 2018). The policy is meant for developing the private sectors and it would look after women empowerment from the economic perspective (Australian Government: Department of Foreign Affairs and Trade, 2018).
Knowledge and skill development of employees and workers is also on the list along with the proposition to enhance the growth of agriculture (Australian Government: Department of Foreign Affairs and Trade, 2018). And all these mean that the Australian trade policy is going to render a positive impact on the economy, industry, and employment in the country. Moreover, it must be noted that Australia’s trade policy, which has concentrated significantly on export, has helped the domestic industries in creating jobs and boost the economic growth in a thorough manner. Such focus give the domestic industrial front more experience in producing for foreign markets and this helps the companies in gaining a competitive advantage in the context of global trade (Amadeo, 2017).
Knowledge and skill development of employees and workers is also on the list along with the proposition to enhance the growth of agriculture (Australian Government: Department of Foreign Affairs and Trade, 2018). And all these mean that the Australian trade policy is going to render a positive impact on the economy, industry, and employment in the country. Moreover, it must be noted that Australia’s trade policy, which has concentrated significantly on export, has helped the domestic industries in creating jobs and boost the economic growth in a thorough manner. Such focus give the domestic industrial front more experience in producing for foreign markets and this helps the companies in gaining a competitive advantage in the context of global trade (Amadeo, 2017).
The trade policy of the Australian Government has rendered a positive impact on the employment opportunities within the country and it has also impacted positively on the industrial and economic growth of the country. The trade policy has been formulated and implemented keeping in mind the vision and mission of creating a prosperous, innovative and sustainable Australian economy, providing opportunity to every industrial and agricultural sectors. Australia’s international trade policy contributes to the fulfilment of the said mission and vision through the process of increasing productivity and international competitiveness and through the process of creation of high-skill, high-wage workforce that would serve as the basis of a strong Australian economy (“Trade Policy at a Glance”, 2012). In the context of formulating the trade policy the government has embraced the principle of unilateralism. In this respect it must be said that the government’s trade policy is implemented with a commitment to the “pursuit of ongoing, trade-related economic reform without waiting for other countries to reform their own economies” (“Trade Policy at a Glance”, 2012). The policy of non-discrimination has also been inculcated within the trade policy of Australia. In this regard one must take into account the fact that Australia is unwilling to seek exclusive preferential access to other countries’ markets (and this has boosted the morale of the domestic industries within Australia) (“Trade Policy at a Glance”, 2012). The theory of separation has also been infused in the Australian trade policy. In this context it must be said that “foreign policy considerations will not override trade policy assessments in determining the choice of negotiating partners and consideration of proposed trade deals” (“Trade Policy at a Glance”, 2012). Another important feature of the Australian trade policy that has impacted positively on the industrial and economic growth and development is that; none of the public has been kept uninformed about the progress of trade negotiations and this has provided opportunities to provide input from every section of the concerned citizenry. Moreover, the indivisibility of trade policy and the related wider economic reforms have focused much on reforming the domestic economy which has directly impact on the employment condition within the country. Also, it must be noted that the indivisibility of the Australian trade policy has also impacted positively on the country’s economy as it has been dedicated to the process of reforming the economy. In this respect it must be said that “domestic economic reform, improved international competitiveness and increased market access work together to create jobs and prosperity” (“Trade Policy at a Glance”, 2012). The Australian trade policy has also put much emphasis on improving the market access for Australian exporters in the global markets (“Trade Policy at a Glance”, 2012). This has provided ample opportunities for the domestic industries to flourish through the process of business expansion. Through the WTO, the Australian trade policy has been striving for achieving multilateral trade outcomes that would boost both the economy and the domestic industrial sectors in a thorough manner. Moreover, it must be noted that the Government’s trade policy has continued to pursue trade liberation at the regional level through APEC and through some other regional trade arrangements (“Trade Policy at a Glance”, 2012). It has been observed that by the dint of such advanced trade policy the Australian Government has been pursuing high quality, comprehensive bilateral free trade agreements, and such approach is going to benefit both Australia and its other trade partners, paving the way for the enhancement in job opportunities in the domestic markets.
Negative Impact of Trade Policy
But the trade policy has some of its negative impacts too on the economy and on the industrial growth and prosperity in Australia. In this respect it must be said that in areas like processed foods and agricultural product, and manufactured goods (including still and automotive products) there have been trade barriers (“Barriers to Australian Trade and Investment in Regional Comprehensive Economic Partnership (RCEP) Participating Countries”, 2018). Changes that have suddenly occurred in the context of duty rates and the use of specific or mixed tariff’s unpredictable increase has also contributed to the negative impact of the Australian trade policy on the country’s economic growth. The cost of importing some specific goods in some regional markets (that has been the outcome of the trade policy) has also rendered negative impact on the economy of the country. The competitiveness of low-cost and efficient producers in the Australian domestic industry has been diminished to a large extent as a result of some of the clauses in the Australian trade policy (“Barriers to Australian Trade and Investment in Regional Comprehensive Economic Partnership (RCEP) Participating Countries”, 2018). Moreover, “some countries impose tariff rate quotas on agricultural products, which severely limit opportunities for Australian farmers and exporters” (“Barriers to Australian Trade and Investment in Regional Comprehensive Economic Partnership (RCEP) Participating Countries”, 2018). It should also be noted that as a result of the implementation of the trade policy, high tariffs have been imposed on automotive, steel, chemical and plastic product sectors and this has affected the employment opportunities in the concerned sectors (“Barriers to Australian Trade and Investment in Regional Comprehensive Economic Partnership (RCEP) Participating Countries”, 2018). And all these should be considered as the negative impact of the Australian trade policy on the country’s economy, industry and employment opportunities.
Conclusion
The trade policy of any nation plays a crucial role in determining the nation’s economic conditions. It must be noted that a proper and appropriate trade policy is a driver for industrial growth and growth in employment, but an inappropriate trade policy can generate the reverse results. The trade policy of Australia should be considered a sound one considering its implications on the overall economic condition of the country. As the country as strong trade ties with the rest of the world, it has become easier for the country’s administration to formulate and implement a sound and effective trade policy. Australia’s trade policy has made the country capable of considering itself a major supplier to the markets in the Asia-Pacific region and this has also contributed to the success of its trade policies.
References
Amadeo, K. (2017). International Trade: Pros, Cons, Effect on Economy. The Balance. [online] Available at: https://www.thebalance.com/international-trade-pros-cons-effect-on-economy-3305579 [Accessed January 15, 2018]
Australian Government: Australian Trade and Investment Commission (2017). Australian export and import laws. [online] Available at: https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-a-business/Understanding-Australian-business-regulation/Australian-export-and-import-laws [Accessed January 15, 2018]
Australian Government: Department of Foreign Affairs and Trade (2018). Overview of Australia’s Aid for Trade. [online] Available at: http://dfat.gov.au/aid/topics/development-issues/aid-for-trade/Pages/aid-for-trade.aspx [Accessed January 15, 2018]
Barriers to Australian Trade and Investment in Regional Comprehensive Economic Partnership (RCEP) Participating Countries (2018). [online] Available at: http://dfat.gov.au/trade/agreements/rcep/pages/barriers-to-australian-trade-and-investment-in-regional-comprehensive-economic-partnership-rcep-participating-countries.aspx [Accessed January 15, 2018]
Davidson, P. (2018). The current state of trade policies in Australia. Parliament of Australia. [online] Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/TradeAgreements [Accessed January 15, 2018]
Trade Policy at a Glance (2012). [online] Available at: http://dfat.gov.au/about-us/publications/Pages/trade-policy-at-a-glance.aspx#p6 [Accessed January 15, 2018]
Australian Government: Australian Trade and Investment Commission (2017). Australian export and import laws. [online] Available at: https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-a-business/Understanding-Australian-business-regulation/Australian-export-and-import-laws [Accessed January 15, 2018]
Australian Government: Department of Foreign Affairs and Trade (2018). Overview of Australia’s Aid for Trade. [online] Available at: http://dfat.gov.au/aid/topics/development-issues/aid-for-trade/Pages/aid-for-trade.aspx [Accessed January 15, 2018]
Barriers to Australian Trade and Investment in Regional Comprehensive Economic Partnership (RCEP) Participating Countries (2018). [online] Available at: http://dfat.gov.au/trade/agreements/rcep/pages/barriers-to-australian-trade-and-investment-in-regional-comprehensive-economic-partnership-rcep-participating-countries.aspx [Accessed January 15, 2018]
Davidson, P. (2018). The current state of trade policies in Australia. Parliament of Australia. [online] Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/TradeAgreements [Accessed January 15, 2018]
Trade Policy at a Glance (2012). [online] Available at: http://dfat.gov.au/about-us/publications/Pages/trade-policy-at-a-glance.aspx#p6 [Accessed January 15, 2018]
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