• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Is Trade Liberalisation a Friend or Foe of Australia ?

Extracts from this document...


Through Australia's history, the country has had a long journey in its manufacturing protection. Tariffs are the most common method of protection around the world. Australia has successfully implemented import tariffs on imported goods. Although tariffs are a form of revenue to the government, this paper will examine that revenue gains from imports are no different than a beggar-thy neighbour policy. Most of the international trade theories are more or less related to the Ricardo's "comparative advantage" theory. The theory is primarily based on the rule that countries should produce (export) what they are best at. So trade can as a result can make both nations more productive and have a more stable economic situation and gain more revenue, as they will no longer be trying to produced some goods which they could otherwise import more cheaply then they could produce themselves. By no longer trying to produce the products they can import cheaper it as a result will increase both country's GDP's (Growth Domestic Product) and lend itself to a higher standard of living. Even though free trade can help develop nations, there are plenty of arguments against tariff cuts and decline in protectionism. ...read more.


It should be noted that the 1991 Statement came in the midst of a recession. Import quotas for PMV were ended in 1 988 and TCF in 1993. In addition, In Australia, they include the effect of persistent analysis and commentary by the independent statutory authority (first the Tariff Board and then its successors, the Industries Assistance Commission, the Industry Commission and the current Productivity Commission), better measures of average tariffs and non-tariff measures and last and most fundamentally the influence of economic theorist who have finally persuaded more and more people and groups that trade liberalisation is in the national interest. During 1977-1988, Corden (1996) states that the government received only two commission report whereas it received 32 reports on what should be done for tariff rates and international trade. Therefore this is highly relevant and it needs to be taken into consideration among the other economical related issues on why the protection has fluctuated but mostly declined over the years. It is known that currency depreciations cause imported good to be more expensive for domestic buyers. Depreciation also leads growth in exports. According to Corden (1986. pg.148), due to the decline in the terms of trade, during 1985-1986 the dollar significantly depreciated and as a result, domestic manufacturers and export industries ...read more.


Australia `s protectionist actions did harm the country in the past. It is very likely that if a country implements trade barriers on other countries they will also be subjected trade barriers by other nations. As a result of this action in the end both countries will loose. In the course current depreciation of Australian dollars due to the world economical crisis, it would be beneficial for Australia to liberalise its economy more than it has ever attempted. The reason why Australia should liberalise more is simply, the depreciation of the Australian dollar will attract foreigners. Hence, Australia can export its goods that have comparative advantage; however, it will be hard to conclude that it also will attract importers due to Australian dollar devaluation. Once again in terms of the economy, it is about a decision making process where pros and cons must always be considered. However, this gain is likely to help Australian economy more than its loss on imports. In relation to imported goods, the Australian domestic economy will be less competitive against imports because lack of competition. On the other hand, this export-orientated situation will lead to decrease unemployment by employing more people within the local industry. Graph 1: Effective Rates of Protection in Australia Source : Productivity Commission, Protectionism Review2001-02 Table 2: ERP Rates Compared 1989-90 to 1996-97 Source : ABS (Australian Bureau of Statistics. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Political & International Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Political & International Economics essays

  1. Since the initiation of the open door and reform policy, China has experienced the ...

    choosing, and relative obstacles during the investment process, location, and technology transfer. As the result of the study, the motives for entering China include the size of the market and the potential it presents for automobile business, and base on current evidence the motives may not be related to cost-saving factors.

  2. Was the Great Depression successfully overcome in Australia by 1930?

    The women and others who stayed and looked after the 'home-front', and fulfilled labour shortages throughout war would expect to continue their employ in the workforce. However whilst the 1920's were prosperous times for Australian's, by 1928, materialism on the part of the 'prosperous' citizen, and the nations increasing trade

  1. "The decline in trade unions over the last twenty five years is due primarily ...

    However the lower mangers, those who managed the shops and their supervisors, had complete decision making powers, regarding the operation of their store and customers, as long as they were mirrored with the company's objectives. The empowerment strategy has overall improved the quality of service, increased staff motivation and sense

  2. Implications for the macro-economy of the central bank adopting an interest rate rule. ...

    except for altering the setting of the real output weight to g = 1.0. Figure 1 (lower) depicts the actual annual percentage change in prices (?) and the GDP gap (y) for the Pre Fed period, and Figure 1 (upper)

  1. The World Trade Organisation ("WTO").

    But emphasis should be given to the need for training within the developing countries in relation to their understanding of the multitude of agreements and their implications. These countries may be financially disadvantaged and it is up to the policy-makers to respond to this shortfall whilst still ensuring the preservation

  2. A case study of the U.S. - Japan Competition and Trade in the Global ...

    However, the questions we must ask are: (1) What exactly has the scope of Japanese that subsidies been? (2) Are Japanese governmental subsidies really bad for America? In the recent debate over protectionism and industrial policy, the name of Japan's Ministry of International Trade and Industry (MITI) has acquired an almost mythical status.

  1. Unions have played a significant role in workforce history, have they outlived their purpose ...

    Gen-X is a generation often misunderstood. It takes its name from Douglas Copland?s 1991 novel, ?Generation X,? a tale of 20-somethings searching for meaning in their lives. Contrary to stereotype, Gen-Xers are anything but lazy and unsuccessful. They work hard, are careful financial planners, and compared to Boomers, save for

  2. Trade Liberalisation and Poverty - the examples of Britain, Vietnam and Nepal.

    Mainly Trade Liberalization affects poverty through its effect on: 1. Economic growth. 2. Factor markets (income and employment), 3. Product markets (prices and availability of commodities 4. Government capacities to implement pro-poor policies (government revenue and expenditure). 1. Trade Liberalization and Poverty ? The Case of Nepal Before1980s, Nepal?s trade policies were mostly influenced by state-led development strategies.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work