implications for Australia of protectionist policies of other countries and trading blocs

• High protection can result in retaliatory effects from other economies
  • e.g. two-way trade war between China and the US

The impact of international protection levels on Australia (6.5)

• The EU has, for several decades, heavily subsidised agricultural production through the Common Agricultural Policy

  • which absorbs over one-third of the European Union’s budget
  • and supplies around a fifth of European farmers’ incomes
  • This denies market access to efficient exporters, like Australia

• Australia is a very large producer of agricultural goods,

  • hence their active role in the WTO aiming to achieve reductions in agricultural subsidies

review questions (6.5)

1. Discuss the impact of subsidies in overseas economies on Australia’s trade performance.
   When overseas subsidies are implemented on goods/services, depending on the presence of said goods/services in Australia’s export base to the overseas economy, the demand for Australian exports drop as the domestic prices are lowered, leading to a decrease in Australia’s BOGS.
   Also leads to allocative inefficiency, (production moves away from efficient industries) akin to trade diversion
2. Compare and contrast recent trends in global protection levels across different industries in the global economy.
   EU protects agriculture
   not alot on mining & resources.

review questions (6.6)

1. List THREE industries that you think will play a greater role in Australia’s export mix in the future. Justify your answer.

2. Outline the likely future trends in the direction of Australia’s exports.
   .