The Significance of Trade in Australia - Coursework Example

Running Header: The Significance of Trade in Australia Relations with the European Union, United States, New Zealand, Japan and China Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: What is the significance of trade in Australia relations with the European Union, United States, New Zealand, Japan and China? Inter country trade relations are activities which are aimed at enhancing trading activities between the countries. Good trade relations ensure that a country is able to export its products which it has produced in surplus and import products which it does not have. This ensures that there is a continuous economic development in the trading countries. Australia enjoys a lot of international trade relations both with immediate neighbors and also with the wider world. The main exports of Australia are coal, wool, zinc and tin ores (Department of foreign affair and trade 1). These among other items are the main trading products of Australia. They enable the country to earn foreign exchange ad in the process be able to support its trading activities and in the same time maintain a stable economy. The main imports of Australia are machinery, transport equipment; IT related materials and technologies (Trading economics 2). This paper will look at trade relations between Australia and other countries. Exports and imports -Australia relations with other countries As indicated earlier, the main exports of Australia are agricultural goods which are mainly wool and wheat, minerals which include iron ore, zinc, gold and energy products which include liquefied natural gas and coal (Trading Economics 2). The main countries to which Australia exports to include Japan, china, European union, South Korea united states. The following graph shows the trend of the Australia’s exports. The other Australian exports include: education services, personal travel, crude petroleum, aluminum, bovine meat, medicaments, refined petroleum, and transportation services, among others. Imports is the other way In which Australia uses trades to interct with its neighbours the main import partners of Australia are European Union, United States, Japan china and Singapore. The main imports of Australia include machinery, transport equipment, office machinery and computers and telecommunication gadgets.Following is a discussion of Australia’s trading partner Australia and the European Union The European Union is the largest single economic partner (Delegation of the European Union to Australia 3). The European Union is a big market for Australian exports. Since Australia exports industrial allied products, they fetch a good market in the vast European Union which is industrial oriented. Minerals which form a large percentage of Australia’s exports are used as raw materials in the European industries. Since Australia is a reliable trading partner, the trading relations between the European Union and it have continued to flourish over the years hence boosting the economies of the two trading partners. On the other hand, Australia imports various products from the European Union. The main imports of Australia as indicated earlier are machinery. The European Union is a major manufacturer of quality machinery which makes it a worthy trading partner to Australia. Other imports that Australia gets from the European Union are medicaments, passenger motor vehicles, goods vehicles, aircraft parts and chemicals. The European Union is also the largest investor in Australia (Delegation of the European Union to Australia 3).The European Union is therefore among the closet trading partners to Australia. The union is composed of many countries which make it large geographically and also economically hence making a good trading partner. Australia and New Zealand New Zealand is one of the growing economies of the world. Trade is an essential component of any growing economy which makes New Zealand a worthy trading partner. The signing of the Australian New Zealand closer economic agreement (ANZCERTA) further made it possible for trade to thrive between the two countries (Austrade 3). ANZCERTA is a form of a free trade agreement which removes some of the barriers which inhibit trade between the two countries. Other trading agreements which have been made between the two countries include ; trade in services protocol, Trans-Tasman mutual recognition agreement (TTMRA), open skies agreement, Customs Cooperation Arrangement, agreed minute on industry, Joint accreditation system Australia and New Zealand among many other minor agreements. Before venturing into New Zealand; various factors had to be considered which includes culture, business etiquette and politics of the two countries. This is normally done by any country which is venturing into business with another country. This helps to identify opportunities and possible barriers which in turn aid the country into finding the right trading strategy. Australia exports, alcoholic drinks, wool and wheat to New Zealand which in return sells machinery to Australia. There is also an exchange of professional services between the two countries. The movement of people in the two countries has allowed for exchange of skills and expertise which has enabled the countries to solve any problems regarding manpower. Australia is the largest investor in New Zealand which means that New Zealand is a choice trading partner for Australia. Australia and Japan A strong bilateral trade exists between Australia and Japan. Australia is more inclined to primary production of products. On the other hand, Japan is inclined to industries which make it a major manufacturer in the world. Japan produces high quality products which are also cheap hence satisfying the needs of the Japan requires the primary product that Australia a produces efficiently whereas Australia requires the high quality goods manufactured in Japan. This has elicited a strong trade tie between Australia and Japan. There have been several agreements which have been made in an effort enhance the trading activities between Australia and Japan. The ancient Commercial Agreement was the start of the trade agreements which was followed by the Basic Treaty of Friendship and Cooperation commonly known as the Nara treaty (minerals council of Australia 4). The most recent trade agreement was the Free Trade Area (FTA) which was established recently. Japan has a Basic Policy on comprehensive economic partnerships which specifies the countries urge to engage itself in trade and economic integration (Department of Foreign Affairs and Trade 1). The benefits that the countries benefit from the free trade area are : a liberalized investment, liberalized trading, strengthening of food trade relations which has enabled Japan attain food security. Australia and United States of America The United States of America is the largest economy in the world. The country is has a big geographical coverage and also a big population which forms a very good market. In addition to this the country is economically powerful translating to a high purchasing power. With Australia being able to access the market, it has made a big impact on its trading activities. The country has a ready a market for its products and in the same case the country as a chance to get the high quality products from United States and in the same case exchange of trade and economic ideologies. The establishment o the free trade area was a major step towards moving to enhanced trade between the two countries. The bilateral trade between Australia and United States of America was boosted by the FTA which allows more trading activities to thrive because of the reduction of trade barriers (Department of Foreign Affairs and Trade 76) Australia and China China‘s economy is one of the greatest in the world, providing a threat to even the likes of the united states. The advantages of Australian trading with China are the same as those of trading with the USA. China and Australia have established a Free Trade Area which has boosted the trading activities and the bilateral trade between the two countries (Wang 501) Conclusion and Recommendations One of the key pillars of Australia’s trade is the effective transport and communication system. (Business Monitor 7) The country should improve on it to ensure that it is able to handle more goods at a faster rate. The country should venture into emerging markets for instance Asia and Africa which will provide a broad market for its products and also an alternative source of specific products for instance agricultural products and textiles. The country should be more vigilant in marketing itself in the world market to ensure that it expands its market accordingly (Nicholas 250). In conclusion, trade is one of the essential tools used to bring about economic empowerment. Trade is two way traffic; there must be a willing buyer and a willing seller. The level of willingness to sell and buy is affected by many factors. Key among them is trade barriers. Trade barriers between countries may exist in forms of taxes, levies, import taxes among other hindrances. Trade between countries is hindered by these barriers hence the reason as to why it is expensive to trade in some countries more than others. The main reason as to why there is the establishment of trade unions and trade agreements is in a bid to counter these barriers and as a result enhance trade among countries. Australia is a major player in world trade. It has investments in several countries and also houses investments belonging to other countries in its borders. It is a producer of agricultural, mineral and manufactured products which mean that it has so find a conducive market to sell its surplus products. In its economic activities, the country also needs inputs and machinery as raw products and capital to aid its activities. Because of these two scenarios, the country needs inter- country trade to be able to sell its surplus and great its inadequacies. The country has entered into several agreements with several countries which have become its major trading partners. The paper has looked at some of the country’s main trading partners; European union, Japan & China, united states of America, New Zealand and Indonesia. There are several more trading partners which engage in healthy trade between themselves and Australia. Inter country trade is surely an essential tool which enhances economic empowerment and Australia is a perfect example of what effective inter- country trade relations can result to. Works cited Austrade. Australian New Zealand Closer Economic Agreement (ABZCERTA), Australian Trade Commission ,2011 Business monitor International. Australian Freight Transport. Business Monitor International. 7. 2 (2011) : 1- 46 Delegation of the European Union to Australia. EU –Australia Economic Partnership, Trade And Economic Section EU, 2011 Department Of Foreign Affairs and Trade. Australia- Japan Free Trade Agreement Negotiations, Australian Government, 2011 Department Of Foreign Affairs and Trade. USA the Bilateral Relationship and FTA, Australian Government, 2011 Gordon P., Australian Japan Economic Relations, Department Of Foreign Affairs And Trade. 3rd ed.2011 Mineral Council Of Australia. An Australia Free Trade Agreement, Walter Bull Building , Sydney, 2011 Nicholas, F. Environmental Policy, National Affairs Australia. 17. 6. (2011): 247-256 Trading Economics. Australian Exports At 28366 Million. Trading Economics, Australian Bureau Of Statistics, 2011 Trading Economies. Australian Imports, Trading Economies Australian Bureau Of Statistics 2011 Wang, G. China’s FTAs: Legal Characteristics And Implications, Chinese Trade. 13. 4.(2011): 493-518 Read More