In today’s globalized business era, business organizations of each and every nation trade their products as well as services globally. Along with this, they export and import products or services to fulfill need of people in an effective and proper manner. International trade plays a significant role in growth and success of the businesses in the global market. International trade has become a popular concept after globalization. It is because of globalization is a process of international integration as well as interaction among the people or business organizations of different nations. Globalization has increased the trade among different nations of the world. On the other hand, the government of nations developed effective trade policies to reduce trade barriers as well as conflicts among nations. Trade policies are the legal laws that are related to the trade of goods as well as services. These trade policies or strategies include import & export regulations, subsidies, and taxes; so business firms can trade products or services without trade barriers.
In addition to this, trade policies describe standards, rules and regulations to develop trade relations among nations. The main aim or objective of trade policies is to increase international trade among nations. Moreover, trade policies are specific to each country; and these policies contain taxes imposed on inspection regulations, import & export, and tariffs & quotas. Trade policies mainly focus on the some major factors including tariffs, trade barriers and safety related to international trade. Effective trade policies are essential for the positive economic growth as well as development of nations. Along with this, this research essay would be valuable to demonstrate the trade policy or policies of Australia. This essay would also be beneficial to portray both positive as well as negative impacts of Australia’s trade policy on economy, industries and employment of nation.
In today’s era of globalization, trade policies are essential to observe market changes, to develop free & fair trade practices and to expand the prospective for successful international trade. Along with this, Australia also adopted as well as implemented effective trade policies to take advantages of free economy as well as open market economy. The Australian government developed trade policies to expand its business in the international market (Metaxas and Weber, 2016). Moreover, with the help of these trade policies, the Australian government wants to promote trade liberalization within nation to improve economic growth and to ensure long term prosperity of the nation. The Australian government established lots of trade agreements or policies to do business with other nations.
On the other hand, the government of Australia mainly emphasizes on three types of trade policies: national trade policy, bilateral trade policy, international trade policy. Under the national trade policy, the Australian government focuses on the interests of business organizations as well as people of nation. Furthermore, under the bilateral trade policy, the government regulates the trade and business relations with other nations. Apart from this, under the international trade policy, international economic organizations such as: WTO (World Trade Organization), OECD (Organization for Economic Co-operation and Development), and IMF (International Monetary Fund) decide the trade policies of nation (Groenewegen and McFarlane, 2014). All these three types of trade policies play a major role to formulate trade strategies as per the requirements of nations. These trade policies take care of the interests of all the nations those are involved in these trade strategies.
In addition to this, by considering these policies, Australia has developed lots of regional, national and bilateral trade agreements with other nations in past and current years. Australia-New Zealand Closer Economic Relations Trade Agreement, Australia-US Free Trade Agreement (AUSFTA), Thailand-Australia Free Trade Agreement (TAFTA), Australia-Chile Free Trade Agreement (ACl-FTA), Singapore-Australia Free Trade Agreement (SAFTA), Malaysia-Australia Free Trade Agreement (MAFTA), Australia China-Australia Free Trade Agreement (ChAFTA), Korea Australia Free Trade Agreement (KAFTA), ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), Japan-Australia Economic Partnership Agreement (JAEPA), etc. are some examples of such trade agreements with other nations (Lovett, Eckes and Brinkman, 2015). These free trade agreements as well as trade policies work in the favor of all the involved nations.
In the same manner, the Australian government makes use of international trade theory and growth theory to develop trade policies effectually. International trade theory play a major role to describe the major concepts related to the international trade. These concepts are essential to develop effective trade policies for the growth of nation (McAllister, Dowrick and Hassan, 2003). Along with this, the international trade theory portrays the major factors that may create trade barriers in different countries. The theory plays a major role to remove the trade barriers and to fulfill the goals & objectives of nations in an effectual and a more comprehensive manner. Moreover, mercantilism, absolute & comparative advantage, new trade theory, porter’s national competitive advantage, and so on are some important classical as well as modern approaches of the international trade theory. The Australian government mainly focuses on the modern approaches of the theory to develop trade policies for nation (Thompson Murray and Jomini, 2012). The international trade theory emphasis on current issues in global economics, for example globalization, regional trading alliances and trade policies; so it is one of the best theories used by the Australian government to develop trade strategies for the growth of the nation.
On the other hand, growth theory is the other theory related to international trade. The Australian government uses the growth theory to develop trade policies for the nation. The growth theory of trade plays a major role to portray the major determinants of market in which a nation wants to trade. For case, productivity, trade barriers, transportation costs, geographical area & distance, population, etc. are the major determinants that are demonstrated by the growth theory (Anderson, 2016). Along with this, with the help of this theory, the government of nation comes about to know the factors those may create troubles for nation in its trade process in future time period. Thus, the government considers all these factors to build trade policies in order to improve the productivity as well as profitability of business corporations.
Along with this, trade policies of nation not only improve the productivity & profitability of business organization; but also enhance the economy and GDP (Gross Domestic Production) of a nation. These trade policies improve the economic as well as financial growth of the nation. Australia’s trade policies are superior to any other nation. It is because of it build legal agreement to reduce trade barriers and improve trade relations with nations. Australia fulfills all the terms and conditions that are mentioned in its trade policies (Van Berkum and Van Meijl, 2000). In other words, it can be said that, Australia is fully dedicated towards its trade policies to trade products or services in a legal manner. In current, the USA, New Zealand, Thailand, Chile, Singapore, Malaysia, China, Korea, Japan, etc. are the major trade allies of Australia.
In addition to this, Australia’s trade policies influence the economy, industries, and employment of nation in both positive as well as negative manner. The positive and negative impacts of Australia’s trade policies on economy, industries, and employment are depicted as below:
Impacts on Australian Economy: Trade policies of a nation have both positive and negative impacts on the economy of nation. As per the trade theory, trade policies have different impacts (positive, negative or nil) on the economic growth and development of nations. These impacts depend on the model assumptions, economic scale, or externalities that exist in the economy of a nation (Chalkual, Peng, Liang and Ju, 2013). Australia’s trade policies have numerous positive impacts on the economy of the nation. In other words, it can be said that, Australia’s trade policy contributes to positive economic growth and development of nation. Along with this, there is a positive and statistical relationship between trade openness and economic growth of nation. With the help of these trade policies, Australia became able to develop strong relations with other nations. These relations not only enhance the trade among nations; but also improve the prosperity of nation in an effectual and a significant manner (Samimi and Jenatabadi, 2014). Moreover, these policies promote exports of products or services that directly improve the financial position of nation. The improved financial position is a sign of improved economic growth of the nation.
On the other hand, according to OECD, WTO, and World Bank trade policies generate positive as well as predictable results for economic growth and development of nations. By considering these facts, Australia has made lots of bilateral free trade agreements such as: AUSFTA, SAFTA, KAFTA, MAFTA, etc. only to boost the economy of nation (Were, 2015). Moreover, trade policies and trade agreements ensure the long-term prosperity of nation. It means Australia will export its products or services to other nations for a long time period. This thing will improve the profits and revenues of nation in an automatic manner. These increased profits or revenues indicate towards the improved financial and economic growth of the nation. With the help of the effective trade policies, Australia makes huge investments in other nations. These huge investments offer high returns that improve the economy of the nation. As a consequence, it can be assumed that, trade policies of Australia have positive impacts on the economy of nation. These trade policies highly contribute in the positive economic growth as well as development of the nation (Armstrong, 2015). Moreover, the below given graph is helpful to show the impact of trade (exports and imports) on the economic performance of Australia:
(Source: Chalkual, Peng, Liang and Ju, 2013)
In the above graph, it is clear that the international trade and trade policies of Australia have improved the economic performance and GDP of nation (Tuhin, 2015). Apart from this, Australia’s trade policies influence the economy of nation in a negative manner. It is because of trade policies impose some trade restrictions that affect the productivity and profitability of nation in a negative manner. The deceased productivity directly influences the economic as well as financial growth of the nation. Moreover, trade policies also impose taxes on nations; therefore they do not trade their products or services in the international market. They have fear that they have to pay a huge amount of money as taxes; and these taxes will reduce the profitability of businesses. These trade policies are affected by the currency devaluation and financial crisis. These affects directly influence the productivity and economy of nation in a negative manner (Nowak-Lehmann, 2003). So, by considering all these facts, it can be assumed that, Australia’s trade policies have a negative impact on the economy of the nation.
Impacts on Australian Industries: The Australian trade policies have positive impact on the industries of nation. Business industries are showing their interests in the international trade. The trade policies of nation promote trade liberalization within nation. Trade liberalization reduces trade barriers or restrictions such as: duties & surcharges, nontariff obstacles, etc. to promote free trade of goods among nations (Handley, 2014). Moreover, due to trade liberalization, trade policies of Australia lead productivity gains to the industries of nation. With the help of these trade policies, domestic industries got opportunities to trade their products in the global market. Now, the industries of nation are enjoying the advantages of free trade. It is because of they are not obliged to follow lots of rules and regulations in order to trade their products in the international market. Free trade permits to industries to use the principle of comparative advantage at the time of trade. With the help of comparative advantage, business industries can sell only those goods in which they are more competent to produce (Stoler, 2004). Moreover, the below graph is helpful to show the increased trade (exports and imports) of the Australian industries in an effective manner:
The above graph shows a rapid increase in the exports and a slight increase in the imports of Australia. The increased exports show that the Australian industries are selling more and more products to other nations. The increased exports are the results of the effective trade policies of nation. Apart from this, a slight increase in imports indicates towards the increased productivity of nation. It means that the business industries of Australia are producing more and more goods or commodities to meet the local, national and international needs in a proper manner (Colton, 2017). In view of that, it can be assumed that the Australia’s trade policies have positive impact on the growth and development of Australian industries.
On the other hand, Australia’s trade policies have some negative impacts on the business industries of nation. For case, the major impact is that the industries are producing more products; but not obtaining high profits due to increase completion in the international market. The other impact is that the industries think only about profits and trade their products in the international market. So, the Australian industries are unwilling to meet the domestic needs of nation. Moreover, due to free trade, the business industries of Australia have control on the whole market. They are producing more homogeneous products to gain competitive advantages over the competitors. There can be seen high completion between the industries of Australia (Okamoto, 2010). In this way, the trade policies of Australia are affecting the productivity and profitability of the industries of nation in a negative manner.
Impacts on Australian Employment: Employment is the other major factor that is affected by the trade policies of a nation. Australia’s trade policies influence the employment level of nation is both positive and negative manner. The major positive impact is that free trade generates lots of job opportunities within nation. The business organizations or industries have need of numerous employees to trade in the international market. The increase demand of workforce creates job opportunities; and the unemployed people capture these opportunities for the career growth (Banting, Chaykowski and Lehrer, 2015). Along with this, according to these trade policies, Australia makes lot of trade agreements with other nations; in this situation, it requires lots of people those can manage these policies and agreements in a proper manner. The increased requirements of labor force directly increase the employment level of nation. Moreover, trade liberalization or free trade encourages industries to improve their production capacities. In this case, the growth of industries will depend on the available labor of nation. The business industries require huge numbers of people to increase their productivity in a proper manner. So, it will also increase the demand of workers; and the increased demand of workers indicates towards the improve employment level of nation (Stanford and Conroy, 2007). Therefore, it can be assumed that, the Australian trade policies have a positive impact on the employment of nation.
On the other hand, the trade policies of nation also influence employment in a negative manner. Australia hires the workers from other nations due to the increased demand of workforce within nation. These workers ask for high wages to take advantages of the opportunities. Moreover, the local workforce shows their interests in other nations to charge high salaries and also capture these opportunities. To resolve such issues, the government of nations use cost cutting strategies to hire employees. These cost cutting strategies reduce the enthusiasms of people. It is because of they are not getting wages as per their efforts. The decreased interests of people increase the unemployment level of nation. These are the negative impact of trade policies on the employment level of nation (Armstrong, 2015). By considering all these facts, it can be said that, the trade policies of nation have both positive as well as negative impact on the economic growth, business industries, and employment level of nation.
Conclusion
On the premises of the above analysis, it can be said that, free trade has become a very popular concept nowadays. Globalization has promoted the concept of free trade or international trade to increase the exchange of goods among different nations. International trade contributes in the positive economic growth as well as development of the nations. Along with this, it is also observed that, Australia has developed lot of trade policies or strategies to take advantages of free trade for the economic growth of the nation. These trade polices reduce the trade restrictions as well as trade barriers; so that they can trade in a conflict free manner. Moreover, Australia makes use of trade theories such as: international trade theory and growth theory to develop its trade policies and to benefit from free trade in an effectual and a proper manner. It has developed numerous free trade agreements with different countries to reduce the chances of trade barriers and conflicts among nations.
On the other hand, it is also observed that, the trade policies of Australia play a major role to improve the economic performance, GDP, and employment of nations. Australia exports more and more products to other nations; and these increases exports play a major role to improve the economy, productivity, and profitability of nation in a positive manner. Apart from this, these trade policies have numerous positive impacts on the economy, industries, and employment of nation. Due to these trade policies or free trade, the production level of nation has been increased. The increased level of production improves the employment level of nation in an automatic manner. The improved production and employment level improves the economy of nation in a positive manner. On the whole, it can be said that, the trade policies of Australia are favorable to the economic growth and development of the nation.
References
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