INTRODUCTION -
International trade generates income throughout the globe through effective allocation of production among other trading nations. At the same time, excessive trade exposure also creates some difficulties as there are adjustment costs linked with fluctuating trade patterns. (Thompson, Murray & Jomini,2012)
Australian economy's liberalisation that began in the 1970s has been significant to its success and competitiveness. There was an acknowledgement that a country gained from eliminating its own border barriers to trade and that those paybacks were compounded if others did the same. Unlike the past, today Australia trades with several countries including free trade agreements with countries like Unites States of America, New Zealand, Thailand, Chile, the Association of South East Asian Nations, Malaysia, Singapore, Korea, Japan and China.
Australia being one of the most open economies internationally, has minimum restrictions as far as import of goods and services are concerned. Due to this, there is rise in productivity and growth. It has developed a competitive advantage in several product and service categories ranging from high-technology products to food products. The Australian companies operating in the service sector across the globe are hugely responsible for growth of Australia's economy. Higher interconnectedness and fall in transport prices have also resulted in opening of the country's economy and enabled important alterations in its trade structure, productivity and employment.At the same time there are regulatory policies in Australia for protection of local industries, public and the surroundings from hazardous products imported from other countries. (Australian Government,2016)
Australia has the privilege of being benefited as the extremely preferred country out of the 163 members of World Trade Organization in terms of participating in international trade with other member countries of the organization. Apart from being a member of the World Trade Organization, Australia has negotiated many bilateral as well as regional trade agreements with other countries.In Australia as well as other countries, trade is being disturbed by a substantial increase in protectionist measures. Application of trade-restrictive measures and handling foreign investment are part of these measures. This has resulted in the variations in trade agreements. Currently, trade agreements provide regular important trade obligations in different fields ranging from investment to environment. (Trade Policy Review of Australia, 2015)
International trade leads to higher revenue that come from different countries by enabling an effective distribution of production internationally. The trade intensity of Australia has closely multiplies over the last five decades through higher integration with trading associates. New reforms has led to higher incomes. Global Trade has immensely contributed to the country's economy. On the other hand, rising exposure in trade and external shockwaves has resulted in certain challenges. Huge alterations in the relative prices of exports as well as imports has led to few current adjustment burdens.
If we talk about global trade, in 2015 the figures had fallen 4% from the $32.27 trillion trade. The growth was just 2% in 2015 and slightly more than 3% in 2014 which is quite slow as compared to the average yearly 10% growth rate from 1961 to 2013. In 2016, foreign trade was 26% of the entire global economy. As per research, exporters are more productive as compared to companies that emphasize on domestic trade. Before the financial disaster in 2008,the growth of international trade was 1.9 times faster than the total economic growth. Post that, the growth rate has been slower as compared to the international economy. (Amadeo, 2017)
This report further analyses the Australia's trade policy in detail and its trade experience with other countries such as United States of America, China and Indonesia.
References
1. Thompson.G, Murray.T,Jomini.P (2012) Policy priorities for international trade and jobs © OECD 2012. Trade, Employment and Structural Change: The Australian Experience,
2. Australian Government(2016), Department of Foreign affairs and Trade. Australia and the World,
3. Amadeo.K, (07 March, 2017). International Trade: Pros, Cons, Effect on Economy,
4. Davidson.P(n.d), Parliament of Australia. The current state of trade policies in Australia,
5. Wto.org(2015) Summary - WTO Australia - Trade Policy Review.