Trade Policy- Comment on Australia’s Trade Policy | Sample Assignment on Economics

Executive Summary

This report aims at analysing the trade policy of Australia and its positive and negative implications. The trade policy of Australia has enabled the country to be extremely efficient. Also, it has enabled the country to develop strong bonds with other countries in the world. Australia’s trade policy is amended from time to time to ensure that various sectors of the country including tourism, education, manufacturing, retail etc. benefit from it. However, this report has also provided a view of the negative implications. There are several challenges amongst policy makers due to the negative impacts of the trade policy.


There is often a need to develop trade policies by the countries so that they can encourage other countries to come and trade. Trade policy refers to the regulations and agreements that regulate imports and exports to international countries. Australia is one of the well-developed countries of the world. The country has strengthened its economy for many years due to the efficient trade relations with other countries. Australia’s trade policy enables the businesses in Australia and outside to collaborate and use resources to generate high profits for Australia as well as for the other countries (Chia, 2010). There are popular trade agreements such as NAFTA, CAFTA and the Middle Eastern Trade Initiatives including the regulations, farm subsidies and tariffs. The key objective of the trade policy is to focus on reduced protection, acquire a more outward-oriented trade regime, enable the multinational organisations to access the exports, larger integration and also enhance the economic efficiency and competitiveness in an appropriate manner. Studies indicate that trade policy also helps in making the country a competitive participant in the international trade. Australia is known for various imports and exports in the world (Elijah et al. 2010). The country exports several products such as meat, cotton, iron, gold and many other minerals to various countries of the world. As far as Australia is concerned, the country is the manufacturing base for foreign exports. It is expected that trade policy will help in attracting huge foreign investment to the country such that more jobs can be created for the people in Australia and abroad. With trade policy, Australian Government intends to regulate the supplies so that Australian consumers buy products at reasonable prices (Gyngell, 2018). This helps in promoting productivity growth so that the farmers in Australia and majority of population can acquire the best value. This report aims at analysing the positive and negative implications of the trade policy of Australia.

Australia and the Global Economy

The economy of Australia is open and trade-exposed. This implies that the changes in the demand of products and services can have huge implications on the economy of the nation. For instance, an increase in the demand of the Australian exports across the world needs to match with the increase in supply. As a result of this, there is an increase in the price of the exports (Gill et al. 2017). The trade boom was driven by huge increases in the cost of certain Australian commodity exports in Australia. Australia is rich in natural resources and infrastructure. For instance, there are second largest accessible reserves of iron ore in Australia, largest reserves of coal and several other gas resources.

Besides this, Australia has strong trade ties with other countries in the world such as India, China, the UK, USA etc. the location of Australia has enabled the country to be a supplier to the markets in the Asia-Pacific region. There are several policies developed by Australian Government that aim at developing and assisting the Australian organisations included in the international trade (Hughes, 2017). There are several regulations as well that aim at protecting the domestic industries, consumers and also from the environment from goods that can be harmful and imported across the world. Australia has trade agreements, tariffs and duties so that appropriate code of conduct is established when doing business with foreign countries.

As far as trade agreements are concerned, Australia has several Free Trade Agreements, also known as FTAs with several countries in execution and several under negotiation with other countries. The FTAs consist of legally binding commitments by every member to provide access to foreign companies to operate in Australia and also invest in the companies in the country. Then there are tariffs and duties. Australia has commitments under WTO on tariffs and tariff quotas and domestic support for agricultural products. The products that are imported in Australia need classification (Pomfret, 2019). The Australian government has established Declaration processes based on the self-assessment by importers. Also there is a need for the companies to make declarations with the Australian Border Force for importing products.

The businesses in Australia are able to import products from foreign countries as part of the trade policy. The companies that consider importing must be aware of government regulations, duties, permits and treatments that are applicable to imported products. The imports that do not adhere to the requirements can be stopped by the Australian Border Force.

Trade in Australia

The largest trading partners of Australia have been Great Britain and the rest of Europe. Australia encouraged other countries to trade with itself due to the need for new markets for manufactured products and need for sourcing raw material for the local business in the country. Studies indicate that the cultural relation between Australia and its mother country contributed to the trading pattern of the country (Rodrik, 2012). Australia’s international trade shifted towards Asia and Pacific countries due to the need of the resources and new markets. Australia lost benefits in trade with Great Britain when it joined with European Union and developed new markets closer to home. For Australia, the crucial trading partners were Japan, Singapore and various other Southeast Asian countries. The trade policy has enabled Australia to develop new markets. The failure of certain key Asian economies such as Indonesia, Thailand and Hong Kong had restricted impact on the economy of Australia. The events happening outside Australia such as problems in the neighbouring countries of Indonesia and Fiji in 2001 did not influence the trade of Australia (Rugman & Verbeke, 2017). The key products exported by Australia include meat, wheat, cotton, spare parts, iron ore, gold. Hence, the trade policy of Australia has resulted in the country establishing tremendous relations with other countries.

Positive Implications of Australia’s trade Policy

The trade policy of Australia has several positive implications for the economy and various sectors of the country. Trade policy has resulted in promoting the economic growth of the country and also increased household incomes significantly. As of 2016, the trade liberalisation of Australia has increased the GDP of Australia significantly, 5.4 percent compared to previous years. Trade policy has led to creation of jobs in Australia for the local as well as international people. Data indicates that 1 in 5 jobs in Australia involve trade-related tasks. Due to trade policy, there are 1.5 million jobs created with respect to exporting and also 670,000 jobs with respect to importing (Swinbank & Daugbjerg, 2017). With trade policy, the products have become cheaper for the Australians. In the last decade, the cost for the products including clothing, motor vehicles, and household appliances have decreased significantly. Therefore, the prices of consumer products have significantly reduced. Trade also led to providing a wide choice to the consumers for better products. With the Australian trade policy, the consumers have got better options including food and drinks, clothing, goods and cars. The consumers have got huge options due to exporting. There is diversification of the market due to which there is huge protection from economic shocks in one market. Trade policy has developed a global market for the Australian products. Australia has a small population due to which people have got higher options to choose from. Trade policy has enabled the Australian businesses to access a potential market multiple times. The GDP of Australia is only 1.7 percent of the global total (Weatherall, 2015). It has provided the Australians to access the global market and benefit from economies of scale. Trade policy has enabled the Australians to earn income on products that are too plentiful for the country people to Asume. For instance, the agricultural produce exports 70 percent of the total production. Also, 95 percent of the iron ore production of Australia is exported.

Trade policy also encourages innovation due to which there are several productivity benefits. There is huge access to global markets due to which businesses have got more competitive and deploying advanced technologies. Data indicate that increasing businesses have innovated in an effective manner. Trade policy has also resulted in the increase of the tourism industry and economy of Australia. The links between individuals have strengthened due to the trade policy (Weatherall, 2015). Due to trade policy, the international tourist arrivals in Australia have increased tremendously. This has made tourism as one of the key industries of the country which contributes immensely to the GDP of the country. As a result of this, there is employment of people as well in the tourism sector. Trade policy has also resulted in increasing the education services of the country. As of 2017-18, the international students have spent as much as $32 billion dollars in Australia (Hughes, 2017). Trade policy has influenced the  education sector in a positive way and has helped in providing long-term benefits for Australia’s reputation in the world. The New Colombo Plan has helped in building an international image of Australia and also developing good links with the people. There are many other plans in Australia that have enabled the country to be successful. It is due to the fact that these plans encourage the industries to flourish and contribute immensely to the GDP of the countries. Otherwise it can be very difficult for Australia to operate successfully without the support of the foreign aides and investors.

Trade policy has also enabled Australia to conduct business with developing countries like India and China. For instance, Indian companies invest hugely in Australia to make profits and vice-versa. Australia also offers trade-enabling assistance to the developing partners to develop prosperous neighbours and expand opportunities for two-way trade. Overall, the trade policy has helped in benefiting the economy of Australia in several ways discussed above. Almost every sector has got the influence of the trade policy in a positive way and it is expected that these sectors will grow in the coming future.

Negative Implications of Australia’s trade policy

Till now, the positive implications of Australia’s trade policy are discussed. However, the trade policy has developed several challenges for the policy makers as well. As the Australia’s economy is already open due to unilateral liberalisation so the country does not have significant negotiating coin. At one hand, the political costs of negotiating trade agreements has decreased in all these years. There are very few industries such as automotive, textile, clothing and footwear that remain subject to tariff protection. The tariffs are less when compared to international standards. The services sector of Australia such as banking and telecommunication to foreign competition due to which local companies have become extremely difficult to operate (Hughes, 2017). The competition in these industries is immense. The trade negotiators face challenges to provide concessions to attract the negotiating partners and provide them attractive offers. The lack of negotiating coin has created a problem for Australia with respect to the country’s ability to bring improvements in market access through Fair Trade Agreements (Gyngell, 2018). Therefore, it can be indicated that the trade agreements of Australia are extremely difficult. There have been certain trade agreements such as AUSFTA that have been extremely criticised by the experts. Due to several trade agreement negotiations, it has become difficult for the policy makers to make informed decisions and also hold back the negotiating coin. Australia is holding back negotiating coins from the ASEAN negotiations. This is for securing the deals with individual members of ASEAN. The politicians of Australia have been too quick to make concessions with the trade agreement negotiations.

Due to massive investment by foreign countries in Australia, it has become very difficult for the local companies to operate in an effective manner (Gyngell, 2018). The situation has become extremely difficult for the local organisations as they face high competition and even the Australian consumer is not ready to buy the goods and services from local brands. They want to opt for foreign brands that are reasonable and more effective. This is a negative implication of the trade policy. The rapid urbanisation has put a lot of pressure on the local companies as they do not have proper facilities to operate. Although the trade policy and agreements make it easier for the companies in Australia to collaborate with foreign companies, this poses a threat for their individual existence in their home country. Hence, the Government of Australia needs to keep a check on the fact that the trade policies do not pose a problem for the local businesses due to which pores and small businesses face challenges in establishing successfully. The major pressure of the trade policy is on the small businesses that cannot collaborate with other large businesses from foreign countries. This leads to loss of their revenue and creating severe conditions for them.

Overall, these are negative implications of the trade policy of Australia. However, these negative implications need to be considered by the policy makers when making agreements and ensuring that trade policy does not wipe out the business for local businesses. The Government needs to provide support to the local businessmen in Australia for their survival otherwise it can deteriorate the domestic market of the country.


In this discussion, both the aspects; positive and negative aspects of the trade policy of Australia have been analysed. However, positive aspects overpower the negative ones due to which trade policy remains a support system for Australia to flourish successfully in the world. It is due to the efficiency of the trade policy of the country that Australia is extremely developed otherwise it would not have been possible for the country to be a developed nation. The country uses its infrastructure and resources to collaborate with other countries and form strong relations. However, the Government of Australia should not forget about the negative impacts and must consider the interest of the small businesses of Australia that also contribute to the GDP of the country.


To conclude, it can be indicated that trade policy enables the countries to carry free and fair trade with other countries. With rapid liberalisation and urbanisation, trade policy has become an important part of every country’s trade strategy. The policy ensures that no harmful product is being exported to the country which can be bad for the consumers and country. In the case of Australia, the trade policy has influenced the country positively as well as negatively. However, the positive implications of the trade policy are more than that of negative implications. It can be indicated that trade policy has enabled the country to boost its various sectors such as create jobs, tourism, education and various other sectors. The country has developed several trade agreements with other countries to carry out fair trade in an effective way. Some of the trade agreements have already been made and executed while certain trade agreements are still in negotiation and will be done in future. The trade policy is amended from time to time such that trade can be extremely fair for the country. The motive of  the Government in amending trade policy is to keep it ethical and for the betterment of the country’s economy and various sectors.


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