4. • Communities of ports
in three cargo ship
subnetworks. The
communities are
groups of ports that
maximize the number
of links within the
groups, as opposed to
between the groups.
• In each map, the
colours represent the
c distinct trading
communities for the
goods transported by
– (a) container ships
– (b) bulk dry carriers
– (c) oil tankers
5.
6.
7. Why does Australia trade with other
countries?
• Promoting continued Australian economic growth to
increase prosperity of nation and people
• Job creation
• Value adding
• More trade can reduced Australian household
expenses (increased competition reduced cost of
goods)
• Provides a number of goods we don’t produce at
affordable cost.
• given population of Australia- we are a sizeable trading
nation/ improve relationship with regional neighbours,
promote democratic humanitarian values and more.
8.
9. Possible Problems with Australian
Trade
• Over reliance on imported goods - cheap so may loose
local innovation, manufacturing/services
• Possibly increase in unemployment
• Trade deficits when value of imports exceeded exports
• Foreign debt increased (Mar. 2015 - Australian’s net
foreign debt is > $955 bn or 60% of GDP)
• Quarantine risk- bio invasions, health risks
• How to ensure environment/human rights/workers
rights are respected in a global supply chain – moral
responsibility
• Loss of due process & sovereignty: ISDS clauses,
supranational courts
10.
11. Two studies (Hufnagel
et al., 2004; Barrat et
al., 2005) used the
global airline network
to “postdict” the
2003 SARS cases.
(A) Observed cases 30
May 2003
(B) Simulation results
12.
13. Why do we have trade policies
• ensure regulation/ put limits on amount that can
be imported/exported
• customs (tariffs)- to promote entrepreneurship to
Australian industries and businesses
• ensure quarantine restrictions (Australia very
particular about quarantine).
• subsidies for domestic industries
• fees and taxes
• put pressure on governments/restrictions/ for
political reasons
14. Australia’s trade history
• Australia has long trading history given multicultural,
immigration, cultural links with other countries. Even before
federation Australian colonies were imposing import trade
tariffs.
• Two types of trad theory arose
– protectionist
– free traders- trade liberalisation
• Britain was Australia's major trading partner, declined in
1960’s now Australia’s 6th trading partner.
• Australia still exports primary products e.g. minerals, wheat
and fruit to Britain/Europe.
• China Japan and Asia-pacific and US- primary and value
added resources e.g. import wool, minerals such as coal and
iron ore, wheat fruit, and manufactured goods, Services such
as education and training
15. How do we trade with other countries?
• Shipping
• Aircraft
• Online (e.g. Steam, iTunes)
• Movement of people – e.g. travel, education,
– What do you think is the most used trading
medium. Why?
– Do you think this will be different in 2050? Why?
16.
17.
18.
19.
20.
21. Five principles guiding Australia's
trade policy
1. Unilateralism
2. Non-discrimination
3. Separation
4. Transparency
5. Indivisibility of trade policy and economic
reform
22. Bi-lateral/multilateral agreements
Closer Economic Relations Treaty Agreement (CERTA)
from the New Zealand-Australia Free Trade Agreement (1965) since
1990 increased support of migration, tourism, transport, and trade. Very
successful.
APEC Asia-Pacific Economic Cooperation (APEC) group.
It has 18 member nations located around the Asia-Pacific Rim that
includes Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan,
South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru,
Philippines, Russia, Singapore, Taiwan, Thailand, United States and
Vietnam. Representing about 43% of total world exports, as well as
imports. More than half of Australia's exports go to APEC countries
ASEAN Free Trade Area (AFTA)
Association of South-East Asian Nations (ASEAN) Free Trade Area (AFTA).
Goals include liberalising trade in ASEAN by progressively removing tariff
and non-tariff barriers, attracting foreign investors, and adapting ASEAN
to the rise of other regional trading blocs.
- Trading blocs allow for mutual economic benefits, democratic and
humanitarian efforts.
23. Trade agreements
ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA)
• Links Australia to ASEAN
• Tariff reductions
• largest FTA Australia has concluded
• covering goods, services, investment, intellectual property, e-
commerce, temporary movement of business people, competition
and economic cooperation.
Trans-Pacific Partnership
• 12 negotiating parties & 40% of global GDP: Australia, Brunei,
Canada, Chile, Japan, Malaysia, Mexico, NZ, Peru, Singapore, USA &
Vietnam
• Intellectual property provisions and secrecy has been controversial
24.
25. Foreign investment
• Australia relies heavily on its foreign investment and
employers
• Hundreds of foreign companies operate in Australia
• Australia is a high exporter of goods, services and capital,
with 60% of its exports going to the Asia-Pacific region.
• Each year billions e.g. (2003 $904.4 billion) direct
investment
• Encouraging global companies to establish regional bases in
Australia by stressing its economic strengths, cultural
diversity and stability promote as a gateway to the Asia-
Pacific with strong trade/links with countries in this
regionAgriculture
• Mining- uranium to India - treaties
26. Case Study 1 foreign investment
• Agriculture- e.g. Chinese investment in
vineyards/ Cotton
Pros
Employment opportunities in foreign market
• aggregate supply shift outward
• incentive for the domestic producers
• Government income is also increased
Cons
• Loss of sovereignty
27. Case Study 2 foreign investment
• Mining - Mining- uranium to India – treaties
28.
29.
30. Social justice and equity issues
• Not as simple as free trade vs. fair trade
• Child labour
• Environmental damage
• Unionisation and labour practices
Editor's Notes
Introduction
Australia has always been a trading nation. Its political, immigration and cultural links with other countries have been reinforced by trade and investment, with its high reliance on imports such as electrical appliances, cars, clothes, footwear, PCs and watches being a reminder of these trade links. The influx of imported products has benefited Australia but in recent decades, the reliance on them has caused problems for its economy. Such problems have included trade deficits, whereby the value of imports has exceeded that of exports by between $12 and $20 billion each year. They also include foreign debt in money owed overseas, which has increased from roughly $19 billion to $527 billion since the 1980s, as well as causing unemployment. Australia's current trade and economic policies, particularly its push for stronger trading links with Asia-Pacific countries, reflect the attempt at tackling these ongoing problems.
Although Australia relies heavily on its overseas foreign investment and employers, with hundreds of foreign companies operating in Australia, it is also a high exporter of goods, services and capital, with 60% of its exports going to the Asia-Pacific region. Agricultural goods and minerals dominate Australia's exports, as do some of its service firms such as Qantas which is well known overseas, especially in its region. This chapter will explore Australia's trade links in its membership with regional trading blocs and agreements, and its shift away from its traditional trading partners such as Britain, and the types of goods exported.
The composition and direction of Australia's trade
For many years, Britain was Australia's major trading partner, with its purchase of Australian farm products and supplies to Australia of consumer goods. Britain's trade with Australia has declined since the 1960s, so that it now ranks sixth behind Australia's top five trading partners. Australia still exports primary products such as minerals, wheat and fruit to Britain and other western European countries despite the decline in trade. However, Japan has become Australia's largest trading partner with its importing of Australian wool, and minerals such as coal and iron ore. Other regional Asian countries have become major importers of Australia's primary products, especially wheat. Japan and also the United States have replaced Britain as Australia's main source of consumer goods. As well as supplying food, raw materials and manufactured goods, Australia currently provides services such as education, training and software development to its Asia-Pacific neighbours.
Regional trading blocs and agreements
Australia's regional links are evident in its trading blocs with countries sharing in common policies, to mutual economic benefit at the expense of outside nations, and to act together to assist trade through quotas and tariffs.
Closer Economic Relations Treaty Agreement (CERTA)
Australia's first trading agreement in its region was the New Zealand-Australia Free Trade Agreement (1965), which was a response to Britain's move away from trade in the British Commonwealth to join the European Economic Community (ECC). This was followed by a call for closer economic ties and the signing of the Australia-New Zealand Closer Economic Relations Trade Agreement (CER) in 1983. In 1988 the two countries agreed to implement free trade in goods from 1990 and discussions are ongoing for increased harmonisation of competition policy, banking and accountancy regulations, as well as mutual links in migration, tourism, transport, and the relaxing of export subsidies between the countries. Points of friction remain on issues such as Australia's strict quarantine laws. CER is recognised as one of the world's most successful free trade agreements.
APEC
Australia belongs to the Asia-Pacific Economic Cooperation (APEC) group (1989). APEC began in response to the growing interdependence of Asia-Pacific economies, and has 18 member nations located around the Asia-Pacific Rim that includes Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, United States and Vietnam. The significance of APEC can be seen in its member countries' increase in exports, valued at approximately US$2.5 trillion and representing about 43% of total world exports, as well as imports, valued at approximately US$2.4 trillion and representing about 44% of total world imports in recent years. More than half of Australia's exports go to APEC countries and about 40 percent of imports and much of its foreign investment come from these. Australia seeks from APEC the promotion of free trade in the region and other countries, to protect and project regional interests in wider negotiations such as the Uruguay Round of the General Agreement
ASEAN Free Trade Area (AFTA)
Another major Asia-Pacific trading bloc is the Association of South-East Asian Nations (ASEAN) Free Trade Area (AFTA). Australia's exports to AFTA countries exceed exports to either the European Union or North America. Its member countries include Burma, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam. AFTA's future goals coincide with Australia's regional trading aims. These goals include liberalising trade in ASEAN by progressively removing tariff and non-tariff barriers, attracting foreign investors, and adapting ASEAN to the rise of other regional trading blocs.
Foreign investment
A high level of foreign investment into Australia has allowed faster development of its domestic resources. In 2003, foreign investment into Australia reached $904.4 billion, up by $47.4 billion or 5.5 percent on the previous year, with direct investment rising 8.4 percent to $233.5 billion. Australia's government has a regional headquarters program aimed at encouraging global companies to establish regional bases in Australia by stressing its economic strengths, cultural diversity and stability. It has further used this to promote its image as a gateway to the Asia-Pacific with strong trade and cultural links with countries in this region. In the late 1990s, Australia's unique stability and economic strength was shown by its remaining relatively unscathed by the Asian Financial Crisis, which was caused by a boom of international lending to the region followed by a sudden withdrawal of funds. Many Australian companies retained a presence in countries hit by the crisis such as Thailand, Malaysia and Indonesia. Australia has since benefited from honouring its regional trade links now that conditions have improved. Further, its ability to adapt to such crises has now been seen by many overseas investors to be proven. Such investors with a regional base in Australia include American firms, Dow Chemical, Hewlett Packard and Microsoft, the Finnish firm, Nokia, and German firm, Siemens.
