Why Trade Is Important To Australia's Economy

1137 Words 5 Pages
Nature of Trade
Trade is ‘the action of buying and selling goods and service’ (Oxford Dictionary).
Trade is important as it allows country’s to obtain goods and services that they would not be able to acquire otherwise. Trading is significant to Australia as it contributes to the economy. The Australian two-way trade service is worth approximately $670 billion, 2013-2014 (Department of Foreign Trade, 2014). Trade is significant as it can recede poverty rates, establish jobs and develop the economy.

Australia’s primary commodity exports are coal, iron ore, gold, meat, wool, alumina, machinery and transport equipment and wheat. Australia’s primary commodity imports are machinery and transport equipment, computers and office machines, telecommunication
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Australia’s free trade agreement to China gives us access to the world’s second largest economy. Australia’s imports from China are valued at $52,135 million and our exports to China are valued at $107,577 million (A. Robb, November 2014). Free Trade Agreements save the average Australian family at least $1000 per year (K. Edge,2012). Australian’s also save money on vehicles including cars from Japan , which cost at least $1500 due to Free Trade Agreements.

Services trade is an important part of the Australian economy, making up 70% of Australia’s GDP. Services Trade includes recreational travel, education-related, business travel, professional, technical and other business services. 4/5 Australians are employed by services. Services accounted for 18.7% of Australia’s total trade exports in goods and services in 2012-2013 (Department of Foreign Trade, 2013). As shown in the graph Australia’s largest service exports in 2012-13 were education related, recreational & business travel, professional services and technical & other. The largest export being education related which was valued at approximately $14
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The mining boom, over the past couple of years the Australian dollar has been high. This has made it harder for Australia to compete with low cost competitors in manufacturing. It is now cheaper to manufacture overseas than in Australia. Manufacturing now only accounts for 8-9% of the GDP. In fact Australia’s five major car manufactures have all announced their closure excluding Toyota. Holden is shutting down in 2017 and Ford in 2016. The manufacturing industry has lead to approximately 200,000 jobs over the past 20 years. As Australia continues to transition from a manufacturing and agriculture based economy to a mining and agricultural based economy the loss of jobs will increase.

Cultural Advantages & Disadvantages
Trade has created opportunities for Australia to become more culturally diverse and maintain our relationship with other cultures.
Australia’s colonial relationship has weakened with Europe, Australia’s trade alliance has maintained this relationship. The former European vice-president Sir Leon Brittan stated ‘The thumping heart of Europe and Australia’s relationship will remain economic.’ Through keeping these ties with Europe it preserves Australia’s historical, social and cultural connection with Europe.

Trade also encourages more contacts with Asian nation. It also encourages more people in Asian countries to visit or migrate to Australia. A growing amount of Australian

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