Free Trade
1. DEFINITION
According to the Macquarie Dictionary, free trade can be defined as “trade between different countries, free from governmental restrictions, such as protective duties, import quotas etc.” (1)
2. ARGUMENTS FOR FREE TRADE
·Free trade makes goods and services cheaper for the consumer, as domestic producers face competition from foreign rivals, thus it lowers the cost of living . (2)
·Consumers have more choice in what goods and services they purchase . (3)
·Trade is known to stimulate economic growth, which can mean greater employment prospects for citizens . (4)
·Through boosting economic growth, free trade reduces poverty and helps poorer countries develop . (5)
·Protectionism is uneconomical because it raises costs for consumers and producers . (6)
3. ARGUMENTS AGAINST FREE TRADE
·Free trade can be used to reduce poverty, but so far has only been used in a way which widens the gap between the rich and the poor countries.
·The free trade rules are unfair and only benefit the rich countries.
·Developing countries exporting to rich countries face tariff barriers that are four times higher than the barriers that rich countries experience.
·The developing countries are forced to open up their markets quickly so the rich can export to them, but themselves have very restricted access to the markets of the rich.
·Transnational companies have the ability to source their labour in developing countries thus exploiting them and contributing to the existing poverty there . (7)
4. AUSTRALIAN TRADE POLICY
·Australia is a member of the World Trade Organisation (WTO).
·Australia has a Free Trade Agreement (FTA) with the United States, the Australia-United States Free Trade Agreement (AUSFTA), which entered into force on 1 January 2005.
·Australia has a FTA with Singapore, the Singapore-Australia Free Trade Agreement (SAFTA), which entered into force on 28 July 2003.
·Australia has a FTA with Thailand, the Thailand-Australia Free Trade Agreement (TAFTA), which entered into force on 1 January 2005. It will result in Thai tariffs, on Australian goods exported to Thailand, being fully eliminated by 1 January 2010.
·Australia is part of the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA). As well as ensuring trade between the two countries, this agreement also means joint collaboration on areas such as transport, quarantine, customs, regulatory and product standards and business law.
·In early 2005, negotiations on a FTA between Australia, New Zealand and the Association of Southeast Asian Nations (ASEAN) commenced.
·Australia launched FTA negotiations with China on April 2005.
·Australia and Malaysia launched bilateral FTA negotiations on 7 April 2005 . (8)
·For more information on Australia’s trade policy, visit: http://www.dfat.gov.au/trade/index.html
5. HOW YOU CAN ACT
Below are suggestions from Oxfam Australia on how you can help make trade fair: (9)
·Sign the Oxfam petition online to make trade fair for developing countries.
·Wear a Make Poverty History white wristband.
·Purchase Fairtrade Coffee.
·Become a Make Trade Fair activist.
·Write to Prime Minister John Howard.
·For more information visit: http://www.oxfam.org.au/campaigns/mtf/povertyhistory/takeaction.html
6. BIBLIOGRAPHY AND FURTHER READING
Australian Government, Austrade, Helping Australians do business around the world: http://www.austrade.gov.au/
Australian Government, Department of Foreign Affairs and Trade, Australia’s Trade Policy Priority Issues: http://www.dfat.gov.au/trade/index.html
Oxfam Australia, Make Poverty History: Take Action: http://www.oxfam.org.au/campaigns/mtf/povertyhistory/takeaction.html
Oxfam (2002) “Rigged rules and double standards. Trade, globalisation, and the fight against poverty”, Make Trade Fair Campaign, Oxfam International.
World Trade Organisation (2003) “10 benefits of the WTO trading system”, WTO publications.
World Trade Organisation (2003) “10 common misunderstandings about the WTO”, WTO publications.
(1) “Free Trade” (2005) Macquarie Dictionary, Macquarie University, Published by Macquarie Library Pty Ltd.
www.macquariedictionary.com.au
(2) World Trade Organisation (2003) “10 benefits of the WTO trading system”, WTO publications, pp. 5-6
(3) Ibid, pp. 7
(4) Ibid, pp. 9
(5) WTO (2003) “10 common misunderstandings about the WTO”, WTO publications, pp.4
(6) Ibid. pp. 7
(7) All statements in section 3 are from: Oxfam (2002) “Rigged rules and double standards. Trade, globalisation, and the fight against poverty”, Make Trade Fair Campaign, pp. 3-4.
(8) All statements in section 4 are from: Australian Government, Department of Foreign Affairs and Trade, Australia’s Trade Policy Priority Issues:
http://www.dfat.gov.au/trade/index.html
(9) Oxfam Australia, Make Poverty History: Take Action: http://www.oxfam.org.au/campaigns/mtf/povertyhistory/takeaction.html