Chapter 3 - International Trade

AUSTRADE

generates market info and insights, promote Aus capability and facilitates connections through global network

3 types of incentives

grants, taxation, others

grants

• export market development grant scheme

• eligible Aus firms can claim up to 50% of their overseas export promotion expenditure, above first $15000 , provided that their total expenses is above $15000 and annual incom is less than $50 mil

• each applicant can receive up to 8 grants

taxation

1) tradex

• upfront exemption from customs duty and GST on eligible imported goods meant for exportation

• goods must ge exported within 12 months and in same condition as imported

2) R&D tax incentive

• by Aus gov to offset some costs a business put into eligible R&D

• to be eligible: must be a company liable to pay income tax in Aus, conduct atleast 1 activity that meets the definition of a core R&D activity, have eligible R&D expenditure of greater than $20000

others

1) export finance australia

• provides insurance and financial support

• help exporters overcome financial barriers

• aus business can take advantage of overseas investment oppurtunity

• works in partnership with banks to provide financial solution

FTA

international treaty which removes barriers to trade by facilitating stronger trade and commercial ties to increase economic integration

role of FTA

• aid in development and growth of country’s GDP

• aim to be mutually benficial for both countries

• allow trade between countries to operate more freely and remove trade barriers for international businesses to create more jobs and tax revenue locally

• make it cheaper and easier for local business to trade internationally

features and benefits of ANNZFTA

features and benefits of ANZCERTA

benefits of FTA

1) specialisation

• allow county to specialise in producing g/s with highest CA, thus efficiency increase

• e.o.s, higher output

2) employment

• increase job oppurtunity in Aus exporting industries, like manufacturing and service industry

3) economic growth

• low UE rate, thus GDP high, economic growth

disadvantage of FTA

1) structural unemployment

• removal of trade barriers create structural UE

• skillset doesnt match job requirement

• difficul for workers find jobs in growth industries, gov assistence needed(EG:technical training)

2) increased domestic economic instability

• dependant on global market

• vulnerable to downturns in market

3) domestic industries

• more competition in Aus due to exposure to foreign competition

• need to lower price to stay competitive, no e.o.s

• hard to become established, affect infant industries