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AUSTRALIA'S TRADE POLICY.
Term Paper ID:24537
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Essay Subject:
In context of regional & international economic theory. Barriers to free trade, policy objectives, Asian Pacific Economic Cooperation Initiative, examples, future.... More...
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10 Pages / 2250 Words
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Paper Abstract:
In context of regional & international economic theory. Barriers to free trade, policy objectives, Asian Pacific Economic Cooperation Initiative, examples, future.
Paper Introduction:
AUSTRALIA IN THE INTERNATIONAL POLITICAL ECONOMY: THE APEC INITIATIVE
Introduction
This research examines the role of Australia in the international political economy focusing on Australia’s objectives in relation to the Asia Pacific Economic Cooperation (APEC) Initiative. Australia’s role in APEC began in 1989 when the country began the push for the Initiative. APEC, although initially established for consultative purposes, has evolved into an 18-country body with an institutional framework and an agenda to promote trade and facilitate investment. The evolution of the country’s objectives since that time is considered, as are the prospects of attaining these objectives.
The Relevant Trade Issues
Intern
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The Pacific Economic Cooperation Council (PECC) was founded as aninformal body in Canberra in 198 by 11 participating countries.[9] Fromthe beginning, the tripartite PECC was a serious, though unofficial, effortto define and pursue the elusive goal of organizing the Pacific for greatereconomic cooperation. "US to Ask Thais for Increased Access to Service Sectors." Journal of Commerce and Commercial 396 (15 June 1993): 4A.Cottrill, K. F. "APEC and Trans-Pacific Dispute Management." Law and Policy in International Business 26 (Spring 1995): 719-734.[9]"International Openness and Economic Performance." OECD Economic Surveys- New Zealand (October 1994): 53-1 5.Langhammer, R. Rivoli, and I. Aquota does so through a direct restriction on the number of items that maybe imported, as opposed to an attempt to price the goods out of the market. J. [2 ]D. A quota also seeks to restrict the flow of goods into a country. The ASEAN member states as a group constitute a larger trading partnerfor Australia than does the European Community.[19] The removal of tariffsfor inter-regional manufactured products within the ASEAN free trade areathat became effective in 1994, however, threatens Australian exports, asAustralian products are not qualified for tariff reduction.[2 ] A strategysuggested by the Australian government for Australian industry is theestablishment of joint ventures between Australian and ASEAN-based firms toqualify Australian products for tariff reductions within the ASEAN freetrade area. [23]E. [19]S. The Australian government isproviding similar assistance to the country's petrochemical sector. Gazard, "ASEAN Common Tariffs," Journal of Commerce andCommercial 4 (29 April 1994): 5A. [3]M. [21]W. AUSTRALIA IN THE INTERNATIONAL POLITICAL ECONOMY: THE APEC INITIATIVE Introduction This research examines the role of Australia in the internationalpolitical economy focusing on Australia's objectives in relation to theAsia Pacific Economic Cooperation (APEC) Initiative. European and Japanese attitudes are as self-contradictory as are those of the Americans. APEC success will facilitate Australia's attainment of itslong-term economic objectives. "The Developing Countries and Regionalism." Journal of Common Market Studies 3 (June 1992): 211-231.Magnusson, P. Awanohara and N. It is designed to restrict the flow of goods into a country bycausing them to be too expensive to compete with domestically producedgoods. [22]S. "ASEAN Common Tariffs." Journal of Commerce and Commercial 4 (29 April 1994): 5A.Green, C. [26]P. "The Balance of Trade." Management Today (December 1995): 74- 77.Payne, D. Cynics, however, contend that preferences are just one moretool used by developed countries in the pursuit of political objectives. [28]Ibid., 76. The Relevant Trade Issues International trade occurs because of differences in costs ofproduction between countries, and because it increases the economic welfareof trading partners by widening the range of goods and services availablefor consumption.[3] Barriers to trade are obstacles that prevent goods andservices from moving freely between countries. While the United States, as an example, pursues an APECagreement in the name of freer trade on a wide scale, the actual intent ofAmerican policy is to establish and American advantage in internationaltrade.[15] NAFTA is a case in point. With American support, however, APEC appears to havegreater prospects for success. [7]D. Scholes, "China Is Foremost Purchaser of Australian Wool For'93/'94," Daily News Record 24 (27 July 1994): 12. A. The primary logic for Asian regionalism, including APEC, is market-driven.[28] The logic is based, in particular, on increasing levels offoreign direct investment by the most economically advanced Asia Pacificstates. [15]"U.S. J. The principal Pacific Basin target of the international economicinitiatives of the Australian government is the People's Republic of China. [4]Czinkota, Rivoli, and Ronkainen, 86. K. "Short-term Paid For Long-Term Gain." Global Trade & Transportation 114 (June 1994): 8.Czinkota, M. Cottrill, "Short-term Paid For Long-Term Gain," Global Trade &Transportation 114 (June 1994): 8. [1 ]Cheit, 118. Another case in point is thestatement by former President Bush to the Australian parliament a few yearsago. (Chicago: The Dryden Press, 1994), 77. IfAmerican actions strengthen perceptions that the ultimate goal of theUnited States is to force Western standards of democratic accountability onAsian nations through APEC trade initiatives, the entire APEC Initiativecould collapse. Australia also faces problems associated with the motives of its APECpartners. T. They Can Hardly Wait," Business Week(14 September 1992): 24-25. Ronkainen, InternationalBusiness, 2nd ed. The major formalbarriers to international trade are tariffs and quotas. Witcher, "Australia Is Keen to Boost Exports of Wildlife toAsia," Asian Wall Street Journal Weekly 16 (13 June 1994): 6. 4B). Pugh, "Australia Shifts Grain Focus in Asian Market," Journalof Commerce 4 (31 May 1994): 6B. Fitzgerald, "Don't Knock Oz's Moves Toward Asia," AsianBusiness-Hong Kong 3 (March 1994): 44-46. By 1992, the PECC included 2 Pacific economies(Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan,Korea, Malaysia, Mexico, New Zealand, Peru, The Philippines, Russia,Singapore, Taipei, Thailand, the United States, and the Pacific IslandNations). Trade involving APEC member states for 65 percent of global trade. The President made this statement on astop-over on his way to Japan, where he intended to berate the Japanese fortheir import restrictions against American products. Australia has also initiated a programwherein game meat from Australian wild life will be exported in greaterquantities to Pacific Basin economies. Rothkopf, "The Big EmergingMarkets," Business America 116 (August 1995): 9-17. The goal is tohave the economies of all member countries accessible on-line by 2 . Cheit, "A Declaration on Open Regionalism in the Pacific,"California Management Review 35 (Fall 1992): 116. "The Big Emerging Markets." Business America 116 (August 1995): 9-17.Scholes, W. Challenges Heavy Farm Tariffs." Facts on File 55 (2 July 1995): 525.Weiss, E. [27]R. J. Yet another type of barrier to free trade is the imposition throughtrade law of technical standards and specifications on foreign products.[5] The application of environmental standards on products entering a countrywhere such standards also apply to the domestic production of similarproducts is not a trade barrier. Challenges Heavy Farm Tariffs," Facts on File 55 (2 July1995): 525. "Australia Shifts Grain Focus in Asian Market." Journal of Commerce 4 (31 May 1994): 6B.Rothkopf, D. [11]Cheit, 117. APEC has implemented a series of initiatives targeted at supportinginfrastructure development goals of the organization's members economies.These initiatives include work towards the development of an Asia PacificInformation Infrastructure (APII), extensive studies on TransportationCongestion Points TCP), creating a public-private sector guidance frameworkto facilitate investment in electricity infrastructure, and analyses ofways in which to increase the availability of capital-public and private-for infrastructure development projects. There are other types of formal trade barriers.[6] Countries resortto the use of trade barriers in an attempt to gain advantages over othercountries, or in an attempt to preclude the gaining of an advantage byother countries over them. J. Green, "APEC and Trans-Pacific Dispute Management," Law andPolicy in International Business 26 (Spring 1995): 72 . BibliographyAwanohara, S., and Chanda, N. Under the General System of Preferences (GSP),one country permits products from another country to be imported underspecial conditions of no or low tariffs and quotas.[7] The avowed purposeof such preferences is to stimulate economic development in less developedcountries. "Government Anticipates Golden Decade For Gas." Gas World International 199 (March 1994): 31-33.Witcher, S. "China Is Foremost Purchaser of Australian Wool For '93/'94." Daily News Record 24 (27 July 1994): 12."U.S. R., Rivoli, P., and Ronkainen, I. T. Under NAFTA, virtually all trade barriers between the United States,Mexico, and Canada will be eliminated by 2 3, creating a single, unifiedNorth American market of 36 million persons.[16] NAFTA provides for theeventual elimination all tariffs, reduction of many non-tariff barriers,liberalized investment requirements, and a new framework for trade inservices between the member countries. Another type of trade barrier is the orderly marketingagreement.[4] Orderly marketing agreements, in effect, impose voluntaryquotas. Langhammer, "The Developing Countries and Regionalism,"Journal of Common Market Studies 3 (June 1992): 225. Freer trade on such a broad scale, however, may be difficult toattain if the GATT/WTO experience is considered as an example. In the mid-198 s, the free-trade Reagan Administrationimposed direct quotas on steel products for all countries. [2]"International Openness and Economic Performance," OECD EconomicSurveys-New Zealand (October 1994): 55; D. A major area of APEC activity in the remaining years of the twentiethcentury is projected to be work in infrastructure development. The President told the Australians that the United States had nointention of abandoning its agricultural subsidies, or of relaxing importrestrictions on Australian beef. International Economic Unions In the 199 s, tariffs and quotas are used extensively by bothindependent countries and by free-trade associations.[8] Free-tradeassociations, such as the European Economic Community (EEC) and NAFTA,reduce the restrictions to free trade among member countries. [13]C. Niblett, "The Balance of Trade," Management Today (December1995): 76. [24]R. [25]W. "Australia Is Keen to Boost Exports of Wildlife to Asia." Asian Wall Street Journal Weekly 16 (13 June 1994): 6.----------------------- [1]R. The United States, as an example, has been a strong advocate offree trade (international trade without government erected barriers) sincethe end of the Second World War. J. Subsequently, the PrimeMinister of Malaysia, Dr. Mohamad Mahathir, proposed the creation of anEast Asian Economic Caucus (EAEC) to include ASEAN members and Japan.Strong opposition by the United States to this initiative, however, hasstymied progress. W. F. [14]Green, 72 . "Uncommon Bonds." Far Eastern Economic Review 156 (18 November 1993): 16-17.Bangsberg, P. Nevertheless, industrial and labor interests in the United Stateswere concerned about imports in several industries, and in the early-198 s,the free-trade Reagan Administration responded to these concerns bynegotiating voluntary import quotas with the Japanese with respect toautomobiles. Whileefforts at increased regional economic integration continues, the membercountries of the GATT/WTO remain unable to settle their differences.Primarily, the United States and the European Community continue to accuseone another of maintaining unfair subsidies and enforcing artificialbarriers to trade, while, at the same time, remaining committed to theirown subsidies and artificial trade barriers. NAFTA became effective on 1 January1994. [6]Czinkota, Rivoli, and Ronkainen, 1 4. the primary target markets areChina, Taiwan, Korea, and Japan.[22] The game meat includes kangaroo,crocodile, fox, rabbit, water buffalo, and wallaby. Payne, "Dominican Labor and the GSP," Journal of Commerce andCommercial 397 (9 September 1993): 1 A. Under the Reagan Administration, theUnited States was possibly the strongest advocate of free trade in theworld. Australia's role inAPEC began in 1989 when the country began the push for the Initiative.[1]APEC, although initially established for consultative purposes, has evolvedinto an 18-country body with an institutional framework and an agenda topromote trade and facilitate investment.[2] The evolution of the country'sobjectives since that time is considered, as are the prospects of attainingthese objectives. J. TheAustralian government also is negotiating with Thailand to open thatcountry's banking, insurance, and telecommunications sectors to Australiancompanies.[24] The United States is seeking similar access for Americancompanies. The application of technical standards toforeign manufactured products which are not also applied to domesticproducts, however, is an example of this type of barrier to trade. Czinkota, P. Many APEC member states, however, remain suspicious the real intentions ofthe United States through that country's participation in APEC. Bangsberg, "China, Australia to Expand Trade and InvestmentTies," Journal of Commerce and Commercial 4 (3 June 1994): 5A. W. Chanda, "Uncommon Bonds," Far Eastern EconomicReview 156 (18 November 1993): 16-17. "Free Trade? They Can Hardly Wait." Business Week (14 September 1992): 24-25.Niblett, R. Prior to the creation of APEC, a trade agreement between Australia andNew Zealand in 1983 effectively has established a common market of thesetwo countries. Thesuccess of APEC would prevent the emergence of an exclusionary regionalagreement that might be detrimental to Australia's international tradingposition. The industry sectors thatwill require the greatest investments are transportation (US$6 7 billion),followed by power generation (US$493 billion), telecommunications (US$256billion), and water and sanitation (US$153 billion). A. APEC failure, by contrast, will compromiseAustralia's ability to attain the country's economic goals. "China, Australia to Expand Trade and Investment Ties." Journal of Commerce and Commercial 4 (3 June 1994): 5A.Cheit, E. When the PECC was formed in Canberra in 198 , the concept of an "openregion" was more hope than reality. At the sametime, however, such international economic unions typically make it moredifficult for other countries to trade with the members of an association. Chicago: The Dryden Press, 1994.Fitzgerald, S. The agreement between Australia and New Zealand involvestwo national economies which are quite small in international comparisons.Nevertheless, the agreement marked the beginning of free trade in Asia. "A Declaration on Open Regionalism in the Pacific." California Management Review 35 (Fall 1992): 116-13 .(8)Corben, R. International Business, 2nd ed. The Australian Wheat Board, as an example, has initiated a move intoPacific Basin economies that emphasize feed grains as opposed to wheatsupplies.[21] Australian feed grains are more competitive in internationalmarkets than is Australian wheat. At the November 1994 meeting of APEC, acommitment was made to create a free trade area across the Pacific by 2 1 for industrialized members and by 2 2 for the remaining members. [5]Czinkota, Rivoli, and Ronkainen, 94. Thisbarrier is used extensively by the Japanese, as an example, to restrict theentry of foreign goods into that country. "Don't Knock Oz's Moves Toward Asia." Asian Business-Hong Kong 3 (March 1994): 44-46.Gazard, D. The WorldBank has estimated that during the 1996-2 5 period, developing East Asianeconomies will have to invest between US$1.2 and US$1.5 trillion ininfrastructure development projects-equivalent to about seven-percent ofthe gross domestic product of these economies. China is already the foremost international purchaser of Australianwool.[25] Additionally, China has indicated a desire to increase tradewith Australia as a means of decreasing Chinese dependence on the UnitedStates and Western Europe as sources of goods and technology.[26] Australia and the Future of APEC Regional trade arrangements in Pacific Region are far less developedthan either in either Europe or the Americas.[27] ASEAN pledged in January1992 to trim intra-regional tariffs to five-percent by 2 3 and to create afree trade area for manufactured goods by 2 7. "Dominican Labor and the GSP." Journal of Commerce and Commercial 397 (9 September 1993): 1 A.Pugh, W. [18]Pugh, (1 June 1994): 4B. [12]S. [9]E. APEC also has embarked on aproject to link electronic databases containing information oninfrastructure projects open to international bidding through the Internet. The PECC provided a facilitatingforum, which, through its task forces, emphasized process, exploringapproaches to economic cooperation and anticipating policy issues.[1 ] ThePECC's success in promoting an outward-looking region facilitated theformation in 1989 of APEC at the urging of the Australian Prime MinisterBob Hawke.[11] APEC was the first region-wide government forum in thePacific. Weiss, "Government Anticipates Golden Decade For Gas," GasWorld International 199 (March 1994): 31-33. [17]W. A tariff is animport tax. The current project links databases from five countries. The Australian government is targeting Pacific Basin economiesas a prime strategy to improve Australian competitiveness in globalmarkets. Increasing regional exclusiveness in international economicorganization (the European Community, the North American Free TradeAgreement, the Association of South East Asian Nations, and others) stripsaway traditional markets for countries such as Australia, whilesimultaneously making it more difficult for such countries to gain entryinto new markets.[17] Australia has already been hurt by NAFTA, as meatexports to Mexico have dropped to just 1 percent of pre-NAFTA levelsbecause of greater tariff-free competition from the United States.[18](Pugh, 1994, p. Pacific Basin countries are also being targeted for increased exportsof Australian natural gas.[23] The Australian government is aiding thecountry's natural gas producers in domestic investment to improvetransmission and construct pipelines. Magnusson, "Free Trade? [16]P. R. Infrastructureinvestment in China alone is projected to exceed US$7 billion during thisperiod. K. Corben, "US to Ask Thais for Increased Access to ServiceSectors," Journal of Commerce and Commercial 396 (15 June 1993): 4A. "Australian Exports of Meat to Mexico Shrivel Under NAFTA." Journal of Commerce and Commercial 4 (1 June 1994): 4B.Pugh, W. Most trade barriers areimposed by national governments through the enactment of trade and tarifflaw, although such laws most often are imposed at the insistence of or withthe support of domestic industry and labor organizations. Pugh, "Australian Exports of Meat to Mexico Shrivel UnderNAFTA," Journal of Commerce and Commercial 4 (1 June 1994): 4B. On a broader scale, the Asia-Pacific Economic Cooperation (APEC)Initiative represents an attempt to extend freer trade throughout a widerarea-the Pacific Basin-than either the EEC or NAFTA.[12] The originalproposal for the creation of APEC excluded the United States, theaggressive trade policies of which were generating considerable resentmentamong Asian countries in the mid- to late-198 s.[13] Japan, however,insisted that both the United States and Canada be included because at thattime Japan did not want to be portrayed as the center of a new "Asian Co-Prosperity Sphere" modeled on that country's pre-Second World Warinitiative.[14] APEC came into being largely at the urging of Australia,because the Australian government recognizes that mid-level economies suchas that of Australia must have relatively free access to internationalmarkets. [8]K. That the twoconflicting actions made American trade policy an oxymoron appears to havebeen lost on President Bush.
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