Free Trade Agreement Between Australia And Japan.
Question:
Describe about the Free Trade Agreement Between Australia And Japan.
Answer:
Introduction
The free trade area is identified as an agreement that encompasses a trade bloc where several countries sign a Free Trade Agreement (FTA). According to Silva (2008), the particular set of agreements involve a cooperation between the two regions to limit the trade barriers. The agreements also include the factors like import quotas and tariffs, increasing trade of goods and services between the two countries. The current study attempts to evaluate the Free Trade Agreement between Australia and Japan. It primarily focuses on the negative aspects of the agreements.
Distortion of resource allocation and administrative burden
The trade agreement is termed as ‘Japan-Australia Economic Partnership Agreement (JAEPA). Although the General Agreement on Tariffs and Trade (GATT) was developed to improve the economic balance between the developed and developing an economy, it executes certain negative aspects as well. It has been identified that distortion of the resource allocation will be maximised, due to the free trade agreement between the Australia and Japan. The prime issues are related to the now- tariff barriers as the Japan’s Export committee are relatively complex (Capling, 2008). The multi-layered regulatory framework has already proved a deterrent for the Australian business trying to market in Japan.
Also, it has been observed that in the trade agreement between the Japan and the Australia, the JAEPA executes a growing concern regarding the administrative burden across the borders. The agreement with the Japan regarding the red meat has become critical for the long-term positioning fort Australia (www.abc.net.au, 2016). As a consequence, Australia strikes the free trade deal with Japan, and beef and horticultural industries secure significant concessions.
Criticism of free trade agreement
The support of the free trade agreements to the world trade liberalisation and the economic enhancement has been questioned. The World Trade Organisation (WTO) caution reflects that the net economic impact highly depends on the architecture of the internal parameters and the individual agreement. Capling (2008) suggested that the trade investment diversions might reduce the benefits of the trade agreement between Australia and Japan. Moreover, the overlapping trade rules can hamper the trade by enforcing extra expenditure on the potential participants.
Employment issues
One of the major negative aspects of FTA is the jobless propensity. According to the details form Australian Trade Ministry, Japan has made a deep cut on the beef tariffs in the last year. It has been speculated that the drawback of the FTA directly affects the net economy of the both countries. Adding to this, the economic forces impede the job rates in Japan. Supporting this Siriwardana (2015) mentioned that the difficulties in Free Trade Agreement had minimised the “job creation measures” in different countries such as Korea, Colombia, etc. Hence, it could be depicted that the economic factor of FTA requites more improvement to get a real effect on the job market.
Conclusion
After analysing the study, it has been addressed that the underdeveloped countries attempt to cut the trade costs to achieve a price advantage. It has been observed that the union opposition, environmental damage, overlapping rules in the trade investment of Japan and Australia are negatively affected by the barriers of Free Trade Agreement. Thus, it could be inferred that the negative aspects of FTA between Japan and Australia need to be modified for the future betterment of import and export business.
Reference:
Abbott hails free trade deal with Japan (2014) Available at: http://www.abc.net.au/news/2014-04-07/australia-japan-free-trade-deal/5372242 (Accessed: 19 August 2016).
Capling, A. (2008). Preferential trade agreements as instruments of foreign policy: An Australia–Japan free trade agreement and its implications for the Asia Pacific region. The Pacific Review, 21(1), pp. 7–43
Silva, L.S.d (2008) “A Macro Analysis of Japan-Australia Bilateral Trade Relations: Present Status and Future Trends”, The Otemon Journal of Australian Studies, vol. 34, pp. 37−54
Siriwardana, M. (2015) ‘Australia’s new free trade agreements with Japan and South Korea: Potential economic and environmental impacts’, Journal of Economic Integration, 30(4), pp. 616–643.
