The Country of Australia - Research Paper Example

? The Country of Australia Introduction The country Australia is recognized as the smallest continent in the world. The country has trade relations with numerous countries of the world. Trade is considered as an essential part of the Australian economy. The country has a very open economy. Although it is believed that in spite of the country’s flexibility towards trade, it is considered as a small trade country as compared to other industrialized countries (Guttmann & Richards, 2004, pp. 1-37). The paper would analyze the trade relations between Australia and the United States. Moreover, in order to conduct extensive business dealings between the two nations the key dimensions to be considered especially in relation to Australia are also depicted in the paper. The future scope of trade between the two countries would also be illustrated in the research. Discussion Trade Relations between Australia and the United States The business relation between Australia and the US has drastically changed in the recent years. The level of trade between countries has increased and with it the standard of living of the people all around the world has also improved. The country of Australia and the United States share quite a few strategic as well as economic interests. A good percentage of Australia’s trade is performed with the US. Moreover, the US is recognized as the largest single investor in Australia. Both the countries have been observed to be equally keen to replicate these factors into trading agreements which could reduce the existing trade barriers between them (Garnaut, 2002, pp. 123-141). On the 1st of January 2005, the two countries entered into free trade agreement to remove barriers of trade between the nations. The objective of the free trade agreement was to attract the American investors more towards Australia. The emergence of the agreement between the two countries played a major role in developing the trade relations between the two nations. The trade affairs between Australia and United States have improved drastically after the two countries signed the free trade agreement. The discussion that occurred in Centre for International Economics in Canberra had made the effort to remove the prevailing trade barriers between the two countries. The removal of trade barriers would provide vibrant benefits to the Australian Economy. The US economy is also expected to experience a considerable benefit (Stoler, 2013, pp. 1-22). Scope of Further Expansion in Trade between Australia and US The market of the US is large with an estimated 270 million consumers which provides a decisive wealth generation opportunity. Because of the free trade agreement, Australia could get an improved access to the US market and overcome its weakness of not been able to produce goods as well as services in keeping with the requirements. Trade between Australia and the US is already very strong as 15% of Australia’s entire trade is with the US. The agreement would further attract the US investors towards Australia. The agreement of free trade between the two nations would also increase the networking between them which would help to enhance the economic performance of Australia. As Australia is a relatively small country, its alliance with a vast developed country such as US would facilitate to take its products globally. After Free Trade Agreement (FTA) was signed between the two nations, Australia has emerged as one of the main centre for the US corporations for investment in energy, finance and biotechnology among others (Xavier, 2001, pp.1-27). Contextually, in terms business customs, executing business operations in Australia is comparatively a convenient proposition for US companies as the cultural environment, language, customer expectations and business practices are quite identical. Australian people aim to focus upon promptness, advance planning along with follow-up and they generally are direct in terms of conducting business dealings (US Commercial Service, 2012). Therefore, these facets enhance the scope of extensive business dealings between the nations. Existing Barriers in Trade between Australia and the USA There are still prevailing barriers in certain products for both the United States exporters and the Australian exports. The barriers in the United States to the Australian exporters are in certain products such as dairy products, textile and footwear, sugar and commercial vehicles among others. The US government maintains high tariff rates on dairy products such as butter, and cheese among others. Apart from these facets, there are certain other regulations with regard to milk products that also act as a barrier to trade. Similarly, high tariff on sugar also restricts the Australia’s trade access to US. The US government retains quotas on import of textile products which acts as a barrier to export. Moreover, high tariff on commercial vehicles could also be an obstacle in trade. Similarly, there are certain trade barriers in Australia for the US exporters. The barriers include high tariff rates on textile and leather products along with vehicle parts (Berkelmans, Davis, McKibbin, & Stoeckel, 2001, pp. 1-112). These barriers could affect the trade relation between the two countries and could obstruct the aim of conducting extensive business dealings between them. Conclusion It can be observed that the economy of Australia is very much flexible towards trade. The country has developed a good relationship with the US in recent times in context to trade. Business customs are also quite similar between the two nations. This factor largely enhances the prospects for the Australian economy. The free trade agreement between the two countries also has played a major role in this regard. It has been observed that the agreement, up to an extent succeeded in minimizing the barriers of trade between the two nations. However, there are certain barriers that still exist between them, which obstruct growth of trade between Australia and the US. References Berkelmans, L., Davis, L., McKibbin, W., & Stoeckel, A. (2001). Economic impacts of an Australia-United States Free Trade Area. Centre for International Economics Canberra & Sydney, pp. 1-112. Garnaut, R. (2002). An Australia-United States free Trade Agreement. Australian Journal of International Affairs 56 (1), pp. 123-141. Guttmann, S., & Richards, A. (2004). Trade Openness: An Australian Perspective. Reserve Bank of Australia, pp. 1-37. Stoler, A.L. (2013). Australia-US Free Trade: Benefits and Costs of an Agreement. Institute of International Economics, pp. 1-22. US Commercial Service. (2012). 2012 Business Travel to Australia. United States of America Department of Commerce. Xavier, P. (2001). Benefits of the Free Trade Area Between Australia and The US in the Context of Developments in the ‘New Economy’. The Australian APEC Study Centre. pp. 1-27. Read More