International Business Assignment: Political Economy of Global Trade

This report delves into the realm of international business, examining the interplay between globalization, theories of international trade, and the impact of government policies. It focuses on Australia as a key example, discussing how governments utilize trade barriers such as tariffs, quotas, and non-tariffs for economic and political reasons. The report analyzes the strategies governments employ to overcome trade barriers, including bilateral, multilateral, and regional mechanisms, with a specific focus on the role of the World Trade Organization (WTO). It then provides a reply to a friend's post, elaborating on the economic, political, and social motivations behind Australia's use of trade barriers, as well as the potential effects of these barriers on the local market and international relations. The report highlights the implications of trade barriers on product prices, government revenue, and the protection of local resources, and concludes with a brief discussion on the social objectives that can be achieved through trade regulations. The report is a comprehensive analysis of the political economy of trade and investment.

Running head: INTERNATIONAL BUSINESS 1
International Business
Name
Institution

INTERNATIONAL BUSINESS 2
Political Economy in Trade & Investment
The concept of globalization and the theories of international trade are greatly discussed
in this paper. Globalization refers to the organizational processes developed through the
international influence. Theories of international trade focus on the trading of goods and services
upon human interaction (Hill, Cronk & Wickramasekera, 2010). Globalization is seen to extend
at a high rate and it is significant in Australia’s income which is a country featured in the
international business. On the other hand, theories of international trade suggest that nations
should focus on trading with other nations. In this case, trading is beneficial and governments
need to focus and trade. Therefore, this paper focuses on the government treatment to restrict and
facilitate trade.
Governments use several barriers to trade such as quotas, tariffs, and non-tariffs. To start
with tariffs, they are taxes which the government imposes on imports. The government aims to
make imports more expensive than the local goods (Anderson & Strutt, 2012). Quotas refer to
the limits designed on the number of products set for imports in a certain duration of time. The
limitation operates in the favor of local producers minimize the importation of the competitive
products as they protect against products dumping (Ravenhill, 2017). Finally, the non-tariffs are
introduced to focus on products manufacturing and quality. Non-tariffs are also viewed as the
product standards.
There are various economic and political reasons why trade and investment barriers are
set. To start with the economic reasons, the government targets to increase the assimilation of
financial markets to facilitate consistency in the trading practices (Cohn, 2015). Also in case,
there is an increase in the global capital inflows as well as international trade the government

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should impose trade barriers. The political reasons such as the anti-global groups require trade
barriers to protect the multinational businesses. In addition, trade barriers are put to avoid
imports from the low wage countries which create a downward pressure on the nations.
Governments adopt strategies such as bilateral, multilateral, and regional which helps in
overcoming international trade. The multilateral mechanism is featured mostly among the
nations which exchange tariffs preferences as it is non-discriminatory (Aggarwal & Urata, 2013).
The bilateral mechanism involves free agreements of trade where nations swap trade
concessions. It helps to overcome trade barriers by addressing issues such as insecurity,
intellectual property, and investment. Moreover, the regional mechanism provides the
government with an opportunity to advance on liberalization and free trade.
The World Trade Organization (WTO) facilitates trade through various ways. For
instance, the organization aims to ease the border processes. This ease allows easy release as
well as clearance of goods. The organization is obliged to assist the nations to engage in
negotiations which concern national development. WTO has various implications such as
assisting the goods and services producers, importers, and the exporters in running their
businesses (O'brien & Williams, 2016). This firm is also seen as an organization for opening
trade. It creates a platform where organizations can negotiate and agree on trade activities. Also,
it helps in settling disputes involving trade and also outlines the trade rules which need to be
followed.
Reply to a Friend’s Post

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In reply to my friend’s post, there are several economic and political reasons that the
Australian government may apply to trade barriers. This step is common to any country as there
is need to take care of its citizens on the basis of promoting local entrepreneurs. Australia adopts
political regulations which concern trading with other countries. Politically, Australia needs to
make a hard decision on controlling the situations in the local market through imposing trade
barriers. Therefore, the barriers allow and limit the importation of various goods and services.
Products such as the arm related materials, natural gas, steel, and sea products are restricted in
Australia. However, there may be sudden changes which may result in competition in Australia.
In addition, the Australian government may impose trade barriers to open doors to
implement free trade with other countries such as New Zealand. Trade barriers also help in
regulating prices of products imported in Australia. Through trade barriers, the Australian
government can increase its revenue from the domestic investments. The economic reasons are
that through trade barriers, the Australian government can achieve economic goals by protecting
against local resources. In regard to the political reasons, trade barriers help the policymakers in
maintaining imports at a low guarantee of political independence. Finally, the social reasons
indicate that the Australian government can reach its social objectives through trade barriers. For
instance, quotas and tariffs help to minimize the public consumption of unhealthy products.
Therefore, trade barriers facilitate public awareness of the products for consumption.

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References
Aggarwal, V., & Urata, S. (2013). Bilateral trade agreements in the Asia-Pacific: Origins,
evolution, and implications. Routledge.
Anderson, K. & Strutt, A. (2012,). The changing geography of world trade: Projections to 2030,
Journal of Asian Economics, 23 (4)
Cohn, T. (2015). Global political economy. Routledge.
Hill, C.W.L., Cronk, T. & Wickramasekera, R. (2010). The Political Economy of Trade &
Investment. In C.W.L., Hill, T., Cronk & R., Wickramasekera (Eds). Global Business
Today:? Asia Pacific Edition (2nd Ed.) (pp. 96-145), North Ryde: McGraw Hill.
O'brien, R., & Williams, M. (2016). Global political economy: Evolution and dynamics.
Palgrave Macmillan.
Ravenhill, J. (2017). Global political economy. Oxford University Press.