Australia's Trade and Economy Analysis

This assignment provides a comprehensive analysis of Australia's trade and economic situation. It discusses the country's bilateral agreements with other nations, the growth of exports, and the impact of Free Trade Agreements on trade relations. The document also examines the Australian small business Tasty Ice-cream's potential expansion into the Chinese market, considering factors such as food safety laws and non-tariff barriers.

Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Major Trading Partners ..........................................................................................................1
2. Bilateral agreements ...............................................................................................................1
3. Types of goods and services dominating Australia's trade.....................................................2
4. Favour-ability of Australia for trade ......................................................................................2
5. Benefits of Free Trade Agreements .......................................................................................2
6. Economic and trade outlook 2017 .........................................................................................3
7. Recommendations...................................................................................................................3

INTRODUCTION
In this assessment, certain components associated with trades of Australia will be
depicted. The benefits and costs linked with Bilateral trade agreements shall be discussed along
with the description of economic trade outlook for the year 2017 for Australia.
1. Major Trading Partners
Australia's major trading partners since 1945 include United States, Japan, China and the
United Kingdom (Handley, 2014). Korea has also been the part of this trading process since a
long time. Since 1945, that is majorly after the first world war, the trading sequences of Australia
and other countries increased because of the post recovery processes (Anderson, McRae and
Wilson, 2012). UK and Japan had been the major partners for quite a long time during this
period. Further, United States has decreased its import from Australia. Currently, China holds a
dominant position as a trading partner of the country. The partnership with China has been on an
increasing graph, however US has declined its quantity of exports over these 60 years (Fifty
years of Australia’s trade, 2014). Moreover, there has been a significant increase in the trading
activities with Asian countries over the past few years.
2. Bilateral agreements
Some of the countries with which Australia has signed the bilateral agreements recently
include India, Ireland, Korea, Chile, Belgium, Poland, Norway, Portugal, Slovak Republic,
Austria, Japan, Latvia, Finland, etc. (Countries Australia has bilateral agreements with, 2017).
Following are the advantages and disadvantages associated with bilateral agreements:
Advantages:
 Easily negotiable, the bilateral agreements provide both the countries a chance to keep up
their point for trading (Capling and Ravenhill, 2011). This further leads to faster
achievements of benefits by the signing countries through trades.
 The failure of negotiations of a multilateral trade are overcome through bilateral
agreements.
Disadvantages:
 The advantages acquired from the Free Trade Agreement are withheld due to triggering
of competing bilateral agreements amongst other nations (Nguyen and Tongzon, 2010).
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3. Types of goods and services dominating Australia's trade
Australia's trade is quite balanced in terms of exports and imports. When considering
figures, the number of items being exported is quite high as compared to those imported. The
major items that are being imported by the country in its export trade include footwear,
computers, watches, appliances, clothes, cars and accessories (Australia's trade in goods and
services 2013-14, 2017). These imports have been due to strong multiple cultural links with other
nations and Australia. Further, the services are quite largely being exported from the country to
different foreign nations. There are huge number of individuals that have Australian nationality
and are providing their services. The agricultural products and supply is also exported to trading
partners in South Asia and Europe (Armstrong, 2012). Minerals and outsourcing of services is
currently dominating the trade of Australia in terms of goods and supply.
4. Favour-ability of Australia for trade
Australia has always been a country with minimum risk involved in the business
environment. The country is very ideal to trade with because of the following reasons:
 One of the strongest economies in the world. It automatically generates great feasibility
and dependency in terms of economic suitability for the country that plans to deal with
Australia (Invest in Australia, 2017).
 There are large number of industries working in this sector which are backed up by
abundance of resources businesses. The country has great scope in terms of agricultural
businesses and financial services. Hence, this automatically safeguards the trade from
risks like recession or inflation.
 Majority of the work force is highly skilled and have diversified knowledge. The
companies and countries trading in terms of services shall reap the advantages of
Australian minds and intellect.
5. Benefits of Free Trade Agreements
The Free Trade Agreements is a sort of agreement signed by two or more countries for
facilitating trading processes in the free-trade area. The benefits of this type of agreement are
depicted as follows:
 The countries can initiate their exports to a new market or substantially increase the
export of goods for concerned target markets.
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 The tariffs on exports of a country's goods are reduced and sometimes made free under
the negotiations and provisions of this agreement (Anderson and Yotov, 2016). China-
Australia Free Trade Agreement is a prime example of this particular benefit. After
complete implementation, majority of the exports i.e. about 95% of Australia's goods will
be tariff free in China.
 The countries engaging in a Free Trade Agreement with Australia shall have
accessibility of resources that are cheap. This shall help in increasing the competitiveness
of goods and services.
6. Economic and trade outlook 2017
The economic and trade outlook of 2017 for Australia depicts that there is a forecast of
about 2.8% growth in the gross domestic product of the country. Furthermore, the economic
conditions have been enhanced with astonishing surge in the prices of coal and iron ore. The
amount of investments in Australian businesses shall bloom but get a sluggish growth because of
the consequent rise that is being experienced in the wages (Dyster and Meredith, 2012). On the
contrary, the slow growth of GDP in the first and second quarter of 2017 can lead to very little
growth till the end of this year. This means that there can be an outcome of 0% growth in 2017
when considering the backlogs of previous year. However, trade outlook depicts that there is
significant rise in the amount of exports being handled by the country. Despite of the technical
recession, there is a probability of accurate recovery in the third quarter.
7. Recommendations
The Australian small business Tasty Ice-cream as mentioned is pursuing to enter the
Chinese markets. The Free trade Agreement that has taken place between the countries in 2014
can be a beneficial factor which will facilitate the trade in foreign country. Following
recommendations can be considered for the exports to China of this small business:
 The food safety laws of China have to be considered so that any sort of legal
complication can be avoided when people consume the products of this company.
 The non-tariff barriers have to be focused by the company so that certain financial inputs
can be saved and used for the settlement of business in foreign countries (Anderson and
Yotov, 2016). These attributes can be accessed through the Free Trade Agreement.
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CONCLUSION
Through this assessment, it can be inferred that the Australian markets are flourishing in
terms of exports and are economically feasible for expanding businesses. The bilateral and free
trade agreements help in smooth flow of trade with the country with appropriate negotiations.
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REFERENCES
Books and Journals
Anderson, J. E., & Yotov, Y. V. (2016). Terms of trade and global efficiency effects of free trade
agreements, 1990–2002. Journal of International Economics, 99, 279-298.
Anderson, K., McRae, C.F. & Wilson, D.W. eds. (2012). The economics of quarantine and the
SPS agreement, University of Adelaide Press.
Armstrong, S. (2012). Australian trade policy strategy contradictions. The World
Economy, 35(12), 1633-1644.
Capling, A., & Ravenhill, J. (2011). Multilateralising regionalism: what role for the Trans-
Pacific Partnership Agreement?. The Pacific Review, 24(5), 553-575.
Dyster, B., & Meredith, D. (2012). Australia in the global economy: Continuity and change.
Cambridge University Press.
Handley, K., (2014). Exporting under trade policy uncertainty: Theory and evidence. Journal of
international Economics, 94(1), 50-66.
Nguyen, H.O. & Tongzon, J. (2010). Causal nexus between the transport and logistics sector and
trade: The case of Australia. Transport Policy, 17(3), 135-146.
Online
Australia's trade in goods and services 2013-14. (2017). Retrieved from http://dfat.gov.au/about-
us/publications/trade-investment/australias-trade-in-goods-and-services/Pages/australias-
trade-in-goods-and-services-2013-14.aspx
Countries Australia has bilateral agreements with. (2017) Retrieved from
https://www.ato.gov.au/Individuals/Super/In-detail/Growing/Bilateral-agreements---
individuals/?
anchor=CountriesAustraliahasbilateralagreements#CountriesAustraliahasbilateralagreem
ents
Fifty years of Australia’s trade. (2014). Retrieved from
https://dfat.gov.au/about-us/publications/Documents/fifty-years-of-Australias-trade.pdf
Invest in Australia. (2017). Retrieved from
https://www.austrade.gov.au/International/Invest/Why-Australia
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