International Trade: Overview, Partners, and Impact on Australia

This document provides an overview of international trade, focusing on Australia's trade performance and its top trading partners. It discusses the importance of exports and imports, the impact of factors like the US-China trade war, and the role of communication and economic factors in international trade. The document also explores various theories of international trade and highlights the challenges and issues faced by companies in the global trade market.

international trade
partners
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Table of Contents
INTRODUCTION...........................................................................................................................3
Overview of the international trade of Australia.........................................................................3
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
The international trade in the organisations are helping in improving the performance.
The organisations are having the businesses beyond the political boundaries and they have many
factors that will impact the decisions. International trade is the exchange of goods and services in
the internation markets of the organisation (Antimiani and Kutlina-Dimitrova, 2020). The
exports and imports are the most important factor of the international trade. The exports means
selling the goods out of the country and import means purchasing the goods and services from
other countries. The organisations have to expand the businesses and the countries will have
international trade when they have less resources and wants the goods and services from
different countries.
Overview of the international trade of Australia
Australia is an island economy that is having the internal trade and the most important
factor and they have 40% of the exports. From the point of view of by Daniel Workman, the
global sales of Australia is US$272.4 billion worth of the exports from the international trading.
The Australia's largest trading partners are Great Britain and Europe. The trading has a shift from
the Britain to Asia and across the globe (Australia’s Top Trading Partners. 2021). The Australia
exports many products from the countries and they are meat, machinery, transport equipment,
wheat, gold, iron ore, coal and minerals. The challenging trade environment of the global
countries have not affected the businesses of the Australia and they have achieved growth in
2018-19.
The top exports of Australia is the minerals, services and energy. In 2017-18 the top
exports of the Australia was in the services and they had a rise in good by 10%, services by 9%
and consumption goods by 2%. The exports of the goods reduced by 0.4% and services increased
by 2%. China, Japan and US are the largest exporters and importers of Australia.
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Illus
tration 1: Australia - A solid trade performance. 2021

From the above diagram it is interpreted that China is the Australia's largest importer and
exporter and it is having 26. 4% of the total import and export of Australia in 2018-19 which is
$235 billion. China is the largest exporter of Australia with $153 billion and 33% of the total
sales and the import of $82 billion which is 19% of the import of products (Australia - A solid
trade performance. 2021). The international trade between China and Australia is growing from
the 2016 and it was $175 billion and increased to $235 billion in 2019 .
Japan is the second largest trading partner of Australia with $89 billion international
trades and it is 10% of the total trades of Australia and US is having 8.65% which is $76 billion.
The Australia has a total internation trade of $891 billion which is 11% higher in the 2019. The
exports of the goods and services is $470.2 billion which is increased by 16% and the imports of
the goods and services is $421.4 billion which is 6.5% higher in 2019.
From the above diagram it is interpreted that Australia is one of the largest country which
is having the international trade and it is the 5th largest economy having the trade partners in
many countries. China is the largest international trade partner of Australia and the economic
impact of the country is affecting the businesses. The import of goods in 2019 is $221564
million, import of services is $70228 million, export of goods is $271005 million and export of
services is $69168 million.
The international trade of Australia is having many banks involved which is helping in
the transaction of goods and services (AUSTRALIAN FOREIGN TRADE IN FIGURES. 2020).
The countries are having international trade when they are can have the products from
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2015 2017 2018 2019
208419 228780 235386 221564
188445 231131 257098 271005
53674 66610 71816 70228
48374 64042 68472 69168
Foreign Trade
Values
Imports of
Goods (million
USD)
Exports of
Goods (million
USD)
Imports of
Services (millio
n USD)
Exports of
Services (millio
n USD)
Illustration 2: AUSTRALIAN FOREIGN TRADE IN FIGURES. 2020

international trades. The Australia is having international trade because they are getting the
products at a better prices and they can be afforded by the people. The customers of different
countries want the products of good quality and they will get it from the international businesses.
The countries cannot have all the products available and they can easily get them from the
international businesses. The economic factors of the countries they are having trade are helping
Australia to increase the performance. The barriers to trade is the risk the Australia is having
which is making them difficult to have the customers in different countries. The US China trade
war has affected the internal trade of Australia. The increase in the export of China to many
countries will affect the import of the Australia because the prices of the products will increase
and they will have to increase the cost. The decrease in the export of China will reduce the cost
of Australia and they will get products at a good prices.
The Australia is having many good communication with many countries of the world.
The businesses in Australia is having many factors that will help them in increasing the
performance of the organisations. The impact of the performance of the organisations will help
them in giving good products to customers in different countries. They are helping them in
increasing the quality. The important of Australia is affected by the internal environment and
they will have to increase the performance. The factors that are important for the organisation
should be analysed and they will increase the performance. The export of the Australia is
affected by the decisions of the countries they are having international trade. The external factors
are important for analysing the performance of the organisations. The trade partners of Australia
is helping them in growing the organisation which is important for the success. The exchange
rates of the countries the political and economical factors will affect the organisation and they
will have to improve the performance.
International trade theory is the sub part of economics which analyse the pattern of
international trade, its welfare implications and its origin. Economics and international trade
theory have developed the effects of trade trade policies. There are various theories which
provides theoretical grounding for the observed trade patterns. These are- Gravity model of
trade, New trade theory, Standard trade theory, Rational choice theory and Heckscher- Ohlin
model theory. Gravity model of trade presents the empherical analysis of trading pattern. The
basic form of gravity model refers to the trade which is based on the difference of the countries
and interactions of the different country economic sizes. This model also focuses on the Newton
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model called ' law of gravity' that considered the difference between physical size and distance of
any two objects. Moreover, it is the bilateral trade flows which is based on the economic sizes
and distances of any two objects or units. This model was introduced by Walter Isard in 1954.
gravity model estimates the pattern of international trade (Ishola, 2020). It is used to test
hypotheses rooted in economic theory of trade. Next is New trade theory which tries to explain
empirical trade that consist of comparative advantage based models. This theory is based on the
assumptions like cresting returns to scale and monopolistic competition. It was developed in
1980s. New trade theory based on the some argue that by using some of the protective measures
can helps the industries in increasing their base and expand themselves into the different market.
The result of one of the theory is home market effect, which assumes that if a company wants to
cluster in one country because if returns to scale and if that is facing high transportation cost then
industry which is located in the country with in increasing demand can minimize the cost (Raza,
2020). Another is Rational choice theory refers to the calculations which is make for rational
choices and they are achieved for the personal objectives.
Rational choice theory assumes that persons are rational actors that use rational
information to make advantage of any situation and try to continuously minimize their losses.
Next is Standard trade model is based on four relationship that is relation between production
possibility and relative supply, second is relation between relative price and demand, third is
determination of world relative supply and demand, fourth is effect of terms of trade that is
export prices are divided by imports prices. Last theory is Heckscher-Ohlin model is developed
by Eli Heckscher and Bertil Ohlin. This is the mathematical model of international trade (Zhang,
2020). This model is build upon the another model called comparative advantage by assuming
the pattern of production and commerce based on the some factors of trading region.
Comparative advantage model uses different technologies in labour productivity. But Heckscher
model does not require any technology between different countries, so this model has identical
technology of production everywhere.
In the global aspect the international trade market help the company to make the growth
of the company but there are some particular issues which are facing the companies in all over
the world. In Australia, the issues which are rises in the international trade are global financial
crises, as these problems are not solved, but the resilience is used as the aspect of the Australia
trade sources. Brexit is also make a strong impact on the Australia export import policies as their
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main source are the client of UK. And because of new Brexit policies it become a issue for the
company. The exchange rate policy of the Australia may affect the business and there
international trade rate. As the exchange rate policies affect the sale and purchase of the country
at high level. Another issue is the tariff charges which are implementing by the other countries
on the Australia and this will decline the growth rate of the country. Another main issue is the
political instability will affect the international trade of the Australia and other countries. The
unstable political issues affect the most on the companies of the country like australia. The
country is facing many issues in international market place due to Covid-19 pandemic. The
economy of the country has got done as people are not able to do their work and are buying only
essential products for living. The trade market has stopped for few months and now it has again
stated but with low speed as income of people are not much. Moreover people are not preferring
to spend more money and other countries are also suffering from same problem. The export
import practices are not able to take place because of the impact of the Covid as the economy of
other countries has gone down. Majorly they import many products from china at much lower
cost which they are not able to get because of political factors. There are number of issues for
trading internationally, these creates problems and increase difficulties in the supply chain
management around the world for functioning at an optimum level. An important issues affecting
global trade are rising tariffs, Australia has an economic influence and power and is engaging
series of trade wars with the help of these tariffs as the main weapon. Imposing various tariffs on
importing of goods results in making favourable trade conditions. Majorly the tariffs are imposed
on goods like solar panel, steel., aluminium and many other similar products.
CONCLUSION
From the above report it is concluded that international trade have different factors that
will help the organisations to have the businesses. The organisations will have to understand the
needs of the customers and they will have to attract them to increase the performance. The
organisation will have to increase the quality that is helping the customers because they are
getting the services which is helping the customers to get the products.
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REFERENCES
Books and Journals
Antimiani, A. and Kutlina-Dimitrova, Z., 2020. Green energy shift and international trade.
Ishola, R.E., 2020. Protectionism in international trade: the importance and effectiveness.
Raza, A., 2020. International Trade and Environmental Performance Index: Panel Analysis of
Twelve Emerging Economies of Asia (Master's thesis, 山山山山).
Zhang, J., 2020. International production fragmentation, trade in intermediate goods and
environment. Economic Modelling. 87, pp.1-7.
Online
Australia’s Top Trading Partners. 2021. [Online]. Available through<
http://www.worldstopexports.com/australias-top-import-partners/>
Australia - A solid trade performance. 2021. [Online]. Available
through<https://www.austrade.gov.au/news/economic-analysis/australia-a-solid-trade-
performance>
AUSTRALIAN FOREIGN TRADE IN FIGURES. 2020. [Online]. Available
through<https://santandertrade.com/en/portal/analyse-markets/australia/foreign-trade-
in-figures>
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