2013 HSC COURSE

ricardo 1800s - All nations benefit from trade by specialising in g + s that they have comparitive advantage in (produce at a lower opportunity cost)

1. specialisation can lead to economies of scale (lower unit cost and higher efficiency) 2. increased output and decreased cost may result in higher living standards 3. increased efficiency results in greater employment in X sectors 4. increased international competitiveness 5. firms have incentive to innovate to remain at a comparitive advantage 6. overcomes climatic and resourse deficiencies

1. infant industries may find it hard to compete 2. industries with comparative advantage may draw away resources from those without causing some regions to lose key industries and employment 3. free trade may lead to negative externalities 4. countries may become dependant on trade 5. may lead to dumping 6. may lead to a sustained CAD

The use of artificial barriers to protect industries from competition. includes: tarrifs, quotas, subsidies, local content schemes, technical standards, voluntary x restraints and anti dumping legislation

taxes on imports to increase the domestic price (thereby decreasing demand for m and increasing demand for local goods)

quantitave limits placed on the amounts of m allowed

payments made to domestic industries to increase the level of supply and decrease prices

requirements that a certain proportion of goods must use local materials

standards of labelling, packaging and safety

self imposed restriction on the quantity of a good that an exporting country is allowed to export to another country. Often created because the exporting countries would prefer to impose their own restrictions than risk sustaining worse terms from tariffs and/or quotas.

prevention of the m of g proven to be sold at a price below the 'normal' price - usually below the domestic price of the good in the country of export

1. protects domestic industries 2. helps infant industries 3. self sufficiency 4. prevents dumping 5. protects employment against cheap foreign labour 6. helps prevent sustained CAD

1. leads to inefficiency 2. decrease living standards 3. increase in price and decreased output 4. may lead to retalliation 5. discourages innovation. Olsen: nations with the highest protection tend to export the lowest proportion of their manufactured output

trade agreemtns between countries to the exclusion of others. e.g. NAFTA, EU. includes: free trade area, custom union, common market, monetary union

Type of trade bloc in which each member country has their own restrictions agains non member countries

Type of trade bloc in which there are common restrictions again non member countries

Type of trade bloc in which there is free mobility of labour and capital

Type of trade bloc in which a common currency is used to increase efficiency in trade and to support one another in the exchange rate

Agreements on trade between countries on a non discrimatory basis (all agreements must apply to all membes and extended to no members provided the reciprocate). May be unilateral, bilateral, or multilateral

1 country on its own. e.g. Australia 1973 cut tarrifs 25%. Used to encourage other countries to follow however they may not

trade agreement between 2 countries e.g. ANZCERTA. quick, easy and specific agreement but limited scope

trade agreement between multiple countries e.g. WTO. large scope but difficult to come to a consensus

global multilateral trade agreement between 155 countries with the aims of removing barriers to free trade (espicially non tarrif) and imposing international standards of trade. Also has a dispute resolution process preventing the unilateral action in trade disputes

1994 - 2001 as a result of the uruguay round agricultural tarrifs fell an average of 30%

The Doha round aim to reduce agricultural protection, give trade concessions to developing countries, lower manufacturing tarrifs and implace environmental and labour standards. Potentially it could have increase global economic activity by $520 billion by 2015 and lift >140 million people out of poverty (world bank estimates). However negotiations broke down in 2008 as consensus was unable to be achieved

1. the WTO is too large to reach a consensus on agreements 2. the dispute resolution process is only effective for smaller countries not larger (as WTO cannot impose restrictions against larger nations as easily)

Multilateral trade agreement that promotes economic growth and development, social progress and cultural growth. AANZFTA is composed of 600 million people, has a combined economy of US $3.2 trillion, buys 20% of australias exports and aims to ride 96% of tarrifs on Australian x.

trading bloc composed of 27 nations. 33% of world trade, 500 million people. Aims to dismantle trade barriers in the EI, encourage EU growth, efficiency and mobility. Tended to increase tarrifs against non member countries e.g. highest agricultural protection in the world (31% of budget)

bilateral trade agreement that aims to elimate trade restriction and harmonise business regulations, tax laws and food standards between Australia and New zealand. Contributed to an average 8% pa increase in trade between A and NZ since being started in 1983. NZ 3rd largest investor in Australia

Regional multilateral trade agreement composed of 54% of world GDP, 2.7 billion people and 44% of world trade. Aims to increase economic security, economic growth, reduce trade barriers and strengthen the community

bilateral trade agreement that aims to make certain goods tarrif free e.g. minibuses from australia, and tuna to australia

bilateral trade agreement that came into effect 1 Jan 2013

Trilateral trading bloc between U.S, Canada and Mexico. Combined economy value of US $17 trillion, 13% of global merchandise trade. Aims to elimate barriers to trade and investment between the 3 and protect IP rights

Bilateral trade agreement aiming to strengthen trade and investment by decreasing tarrifs and increasing market access