The Impact of Protectionist Policies from USA

Added on - 21 Apr 2020

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Assessing Australia’s FreeTrade with USA tounderstand the impact ofprotectionist policies fromUSARecently, the President of United States expressed concernsabout the Free Trade Agreements and their impact on the USEconomy. He suggested the cancellation if free TradeAgreements. Australia is one of the countries to affected , if anysuch policy measures were to be taken. This paper asses theimpact of such a policy
Contents1.Introduction.........................................................................................................................................32.The USA- Australia Free Trade Agreement........................................................................................32.1 Some Stipulations of the Free Trade Agreement (FTA)....................................................................32.2 Major Topics of USA- Australia Free Trade Agreement...................................................................42.4 Trade Balances Since the Ratification of the USA Australia FTA.....................................................52.5 Foreign Direct Investment.................................................................................................................62.6 Criticism of the US – Australia Free Trade Agreement.....................................................................73.The Trans Pacific Partnership..............................................................................................................84.Threats to Australia and Opportunities Arising Due to Adoption of Protectionist Policies by USA..105.Conclusion.........................................................................................................................................10Bibliography..............................................................................................................................................11
1.IntroductionThe USA is the largest economy in the world with a nominal GDP of over US$18 trillion in2015-2016 and a population of 323 million.[ CITATION Ban17 \l 1033 ]Thus, the USA is a bigmarket and a source of goods and services for any country.Australia has a per capita Gross National Income USD 65, 640 and a GDP of over of over USD1.6 Trillion per year and provides a sizeable market of a population of over 24 million for USexports.[ CITATION Ban17 \l 1033 ]Australia is also, the fourth largest trading partner ofAustralia. Australia’s most important trade and investment partners: the largest foreign investorin Australia, Australia’s largest foreign investment destination, and the fourth largest destinationfor Australian exports (2016).”[ CITATION Mar171 \l 1033 ]The two countries are both high income group countries and hence, important trade markets foreach other.[ CITATION Ban17 \l 1033 ]Recently, the President of USA announced in a series oftalks, his points of view on the ineffectiveness of Free Trade Agreements in improving theeconomy of USA. This led to global concerns about the rise of protectionist voices.[ CITATIONPro17 \l 1033 ]. This paper examines the effects of such a policy by assessing the current FreeTrade Agreement with USA and the Free Trade Agreement in pipeline.2.The USA- Australia Free Trade AgreementThe USA and Australia signed a Free Trade Agreement (FTA) on 1stJanuary 2005. Theagreement covered a broad ranged of topics with trade in goods and services. Primarily, trade inmanufactured, agricultural goods and trade in services especially financial services were themajor topics of the Agreement.[ CITATION Shi15 \l 1033 ][ CITATION Ann14 \l 1033 ].Additionally, Intellectual Property Rights, Government Contracts and Legal frameworks forsetting of standards of goods and services were also major components of the Agreement.[ CITATION Ste16 \l 1033 ]
2.1 Some Stipulations of the Free Trade Agreement (FTA)2.1.1 Elimination of Duties Clause: Both parties agreed to eliminate custom duties on goodsoriginating in the other country and both parties agreed to non introduction of more duties forgoods originating in the other country as long as the FTA was in force.[ CITATION Dep04 \l1033 ]In addition to the tariff barriers, the Free Trade Agreement also addresses non-tariff barriers suchas quotas, services and investment, e-commerce, barriers to participating in governmentprocurement .process etc.[ CITATION Dep04 \l 1033 ]2.1.2 Non Treatment Clause: Each party assigned to the other a ‘non-discriminatory treatment’i.e goods made of substantially altered in the other country would receive the same or somewhatthe same treatment as goods made or substantially altered within the country. This is the “NonTreatment” clause.[ CITATION Dep04 \l 1033 ]2.1.3 Transparency Clause: Australia agreed to enhancing the listing, pricing and selection ofmedicines on the schedule of Pharmaceuticals described as the PBS list.[ CITATION Dep04 \l1033 ]2.2 Major Topics of USA- Australia Free Trade Agreement2.2.1 Agriculture and Allied SectorsBoth countries give each other preferential treatment in trade of agricultural goods and services.This goes beyond treating each other as “Most Favoured Nation”, which is a stipulation of thetreaty. If the treaty is revoked, the Most Favoured Nation status would have to be renegotiated.[ CITATION Off17 \l 1033 ]The USA and Australia have also agreed to work on reach agreement that would phase out anyexport subsidies for agricultural goods to each other.[ CITATION Off17 \l 1033 ]Once, revoked,the treaty may lead to substantial trade barriers towards each other, if protectionists policieswere to take place. Australia is a major exporter of agricultural products like grapes, beef, wooletc. The USA market would becoming less accessible to Australia. On the other hand theAustralian market would become less accessible to USA.Given that the USA is the largestinvestor in Australia, any protectionist policies would hurt the multi-national corporations based
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