Trade Policy

Abstract

No country practises completely free trade. All countries place some restrictions on the movement of goods and services across national boundaries. Some however practise freer trade than others by having fewer restrictive trade regulations. For the first eighty or so years of Federation Australia was less enthusiastic about free trade, especially in manufactured goods. Trade protectionism was an article of faith for policy-makers, business, labour, and the wider community. It was widely accepted that Australia needed to protect its manufacturing industry and some weaker sections of agriculture from international competition to ensure higher wages, bigger profits, and employment for an expanding population. Since the 1980s, beginning during the years of the Hawke Labor government, Australia has increasingly embraced freer trade, unilaterally lowering protection and encouraging other countries to do the same—through multilateral and regional forums, the Cairns Group of agricultural exporters, and bilateral trade deals. Both major political parties have supported the shift to freer trade, just as both supported trade Protectionism before the 1980s. The Howard Liberal–National Coalition government has consolidated the shift towards freer trade, although its trade policy has been more pragmatic than that of its predecessor because of its emphasis on bilateralism.

A country's performance in international trade is an essential part of improved living standards. Economist Alfred Marshall argued that ‘the causes which determine the economic progress of nations belong to the study of international trade’. Exporting provides capital for domestic development and for importing the goods and services that a country cannot provide for itself. Trade is especially important for small countries (in terms of population) like Australia, which cannot possibly make all the products desired by its population.