Free Trade Agreements And Their Economic Impact On Australia

Question: Discuss about the Free Trade Agreements And Their Economic Impact On Australia. Answer: Australias manufacturing and agricultural industries rely upon exports to generate revenues. Trade barriers reduce the amount of earning that the Australian industries can earn from international trade. According to De Benedictis, De Santis, and Vicarelli, C. (2005), as much as it is believed that the solution is to have in place multilateral trade, there still exist some barriers in respective countries which hinder seamless operation in the buying and selling of products. However, in recent years, there have been profound shift in the way multilateral trade occurs. Australia has been one of the countries which have taken part in this prudent business changes. Currently, Australia has in place six free trade agreements where the barriers to trade in these six countries have been scrapped off. The agricultural sector is the one which have greatly benefited from this trade agreements as china, japan and Korea are Australias biggest agricultural importers. There are major positive that Australia gets from having free trade partners. One of the impact is realization of tariff reduction. Most of the products in Australia have become cheaper that before due to the reduction in taxes. Free Trade Agreements aims at reducing any trade barriers including taxes to almost zero. For this reason, most of the imported products that find their way in Australia comes with an extremely cheaper price since the taxes inflicted on them is way too low. It should be noted that taxes on Free Trade Agreements do not exceed five percent. The implementation of Free Trade Agreements in Australia have made her realize simulated changes in prices as one of the economic impacts in Australia. The prices of goods and services are usually lower than those of which are outside Free Trade Agreements. This makes it hard for the exporters who are outside Free Trade Agreements since the competition standards have been set so high (Siddique and Sen, 2016). Case in point, the Australia-China Free Trade Agreement lead to a fall of the prices of imports of manufactured products from china (He, and Sappideen, 2013). Consequently, the cost of agricultural products that china important has fallen dramatically. These trade agreements have made Australians realize fall in prices of almost all manufactured products. For this reason, the more people in Australia are purchasing the manufactured product due to its cheap prices thus increasing the demand on imported products. Just like any other participants in the Free Trade Agreements, Australia is showing a profound shift regarding its increase in Gross Domestic product (Ranald, 2011). The smaller participant usually receive the greatest increase Gross Domestic product. For instance, the Gross Domestic product between china and Australia, it is Australia which benefits the most because china has a lot more to offer in its manufactured products than Australia has to offer in terms of agricultural products. This means that the economic performance of Australia increases per year due to the increase in the trade activities of exporting. Due to the numerous Free Trade Agreements, it is likely that the Gross Domestic product for Australia is will shoot up over the years. Consequently, for Australia to ensure that it maintains it increase in its Gross Domestic product, it should be open to more Free Trade Agreements. References De Benedictis, L., De Santis, R. Vicarelli, C. 2005, "Hub-and-Spoke or else? Free trade agreements in the 'enlarged' European Union",The European Journal of Comparative Economics,vol. 2, no. 2, pp. 245-258. He, L.L. Sappideen, R. 2013, "Free Trade Agreements and the US-China-Australia Relationship in the Asia-Pacific Region",Asia Pacific Law Review,vol. 21, no. 1, pp. 55-76. Siddique, M.A.B. Sen, R. 2016, "Australia-Thailand Trade: An Analysis Of Competitiveness And Effects Of The Bilateral FTA",The Journal of Developing Areas,vol. 50, no. 5, pp. 103-118. Ranald, P. 2011, "The Trans-Pacific Partnership Agreement: Contradictions in Australia and in the Asia Pacific Region",The Economic and Labour Relations Review : ELRR,vol. 22, no. 1, pp. 81-98.