Its A Matter Of Trust

Economically Australia needs to increase exports but can we rely on the US to play fair in the Free Trade Agreement?

As Australia delves into its most crucial capitalist venture in recent times, this student examines some of the consequences and motivations which have pushed the issue of The Free Trade Agreement with the US to the forefront, and discovers the potential benefits are only as certain as the integrity of our trading partner.

Australia's current trading pattern has resulted from its origins of being a British white settler colony in the nineteenth century where we export raw materials and import finished, high value added goods. It has had a dependent development where imperial integration with domestic development are joined and Australia is reliant on the export of primary commodities.

As a primary commodity exporter we tend to be overly reliant on a few export items, while the manufacturing nation (the US) has a multiplicity of sources of raw material, as technology has allowed raw material production to be increasingly efficient and available, and lowered supply costs. Being a primary sector exporter and secondary sector importer, our terms of trade will decline in the long run, because of the falling component of raw materials over time, as a proportion of the value added of elaborately transformed manufactures. There are issues of environmental sustainability as natural resources are depleted.

Australia's manufacturing sector is currently unable to competitively supply the elaborately transformed manufacture that we are importing. It is important for Australia's economy that we make moves to increase our exports. Our current account deficit comes about from an imbalance between imports and exports, as we are buying too many goods from overseas while not selling enough exports to break even or be in surplus.

The question is will The Free Trade Agreement that is proposed actually increase exports out of Australia more than imports into Australia?

The Agreement isn't 100% free trade on either side; it is more like "The Mostly Free Trade Agreement". The key is striking a balance where the advantages outweigh the disadvantages. Our Government's stance is that a large proportion of US agricultural exports to Australia already enter our market duty free, while our product is subjected to significant restrictions in tariffs and quotas. The Agreement will see 66% of tariffs applied by the US to Australian

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