Aussie companies to do it easier in Asia
Student Number: 00026711T
Lecturer: Tim Beaty
Essay topic: International Free Trade
Word count: 1,480
Every day Australia and Australians benefit from international trade. Australia has a population of only 22 million people and trade generates a global market of a growing seven billion. All around the world people are consuming Australian food and using locally produced products, whether it be operating computers with Australian software or drinking Australian wine. While many economists and organisations adopt and support the benefits of a free trade agreement (FTA), there are groups that promote the concept of ‘fair trade’ and disapprove free trade. Such groups classify free trade as being possibly disadvantageous to many people, predominantly in unindustrialized countries, where local producers and employees are susceptible to exploitation.
This essay will discuss the establishment of the ASEAN-(Association of Southeast Asian Nations) Australia-New Zealand Free Trade Agreement (AANZFTA). Also it will introduce organisations that initiate the concept of free trade and provide a detailed examination of some key advantages and disadvantages in trading with other nations.
The ASEAN-Australia-New Zealand Free Trade Agreement may be one of the most significant trade agreements ever to be signed in the Asia-Pacific region. This agreement is Australia’s most important trade deal since the FTA with the United States in 2004 (AUSFTA) (Sandford, Kordvani, TanKiang, Lac & Strating, 2009). The AANZFTA is a multilateral agreement, that has been favoured by the Australian government in recent years and is explained as, a country can reduce its trade restrictions while other countries do the same, in other words it can bargain with its trading partners in an attempt to reduce trade restrictions around the world (Gans, King, Stonecash, & Mankiw, 2009, p.189).
The AANZFTA is Australia’s first FTA signing since the onset of the Global Financial Crisis (GFC) that occurred in 2007-08 and on 27 February 2009 the AANZFTA was signed in Thailand. The FTA involves twelve developing and developed countries that have been bridged with the AANZFTA making it the largest FTA Australia has signed with any entity. These countries include, Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam, Australia and New Zealand, which all constitute one of the most dynamic economic regions in the world. The AANZFTA will be a benefit for a variety of exporters in the region engaging in business, including dairy farmers, car parts manufacturers and drug companies. As quoted in O'Malley (2009), Trade Minister Simon Crean states,
"With this level of trade, which is bigger than our trade with Japan or China or the United States, this agreement with ASEAN has great potential to increase job opportunities for Australian workers".
The AANZFTA extends across 12 economies and has a combined Gross Domestic Product (GDP) of $3.1 trillion with over 600 million people (Edge, 2010). AANZFTA covers all sectors including services, goods, intellectual property (IP) and investment. This is the first time ASEAN has embarked on FTAs to this degree simultaneously, making it an historic event. The AANZFTA entered into force on numerous dates during 2010 for Australia, New Zealand, Brunei, Burma (Myanmar), Malaysia, Philippines, Singapore, Thailand and Vietnam. On 1 January 2011 the AANZFTA entered into force for Laos, 4 January 2011 for Cambodia and on 10 January 2012 AANZFTA initiated for Indonesia (Department of Foreign Affairs and Trade, 2009).
The Australian government forecasts positive future prosperity with the decision of the AANZFTA and believes it will provide a number of benefits for Australia and Australians. Among the benefits from the FTA is a reduction in tariffs, which is a tax on goods produced abroad and sold domestically...
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