Media Analysis: Australia-China Free Trade Agreement - Coursework Example

BBA 340- Cross Cultural Management: Media Report – Email – – ial/ day time – Unit – Assignment – Word Count – Assignment 2 Media Analysis: Australia-China free trade agreement Table of Contents Link to the article.......................................................................... 2 Introduction................................................................................... 3 Negotiation and free trade analysis............................................... 4 Import and export relevant to target market and culture............... 6 Conclusion.................................................................................... Reference...................................................................................... Media article: http://www.news.com.au/finance/small-business/australiachina-free-trade-agreement-what-it-means-for-you/story-fn9evb64-1227118988690(Australia-China free trade agreement: What it means for you) Introduction Under the circumstance of globalization nowadays, each host country that is isolated and ignored by other countries cannot get long-term development goals. This is explained by the fact that dependency among between countries is factored in the Free Trade Agreements (FTAs) which enhance and push for the development agenda in such countries. Some Third world countries especially in Africa are aware of the significance of this mainstream and devote to developing their economy by choosing to partner with the developed countries such as China (Krugman, 1995). The relationship between China and Australia is stable friendly and harmonious. For instance, in the year of 2014, Chinese city Shenzhen became sister city with Canberra and it is from this revelation that one can draw this hypothesis that the Australian and Chinese economies are strongly complementary. China has been identified as Australias largest trading partner, with total trade (goods and services) between the two countries in 2009 valued at $85.1 billion, an increase of 15.1 per cent over the previous year. ( http://www.china.embassy.gov.au/bjng/relations2.html). In late last year (2014), it was noted that the China-Australia Free Trade Agreement had been completed and this agreement could up more than 90 percent of Australia exports from tariffs over the next four years. This implies that the importation and exportation personnel are grooming the country for a very vital and benevolent opportunity. However, the process to approve the agreement is full of conflict and is expected to go through a further negotiation period. The last part of this report will illustrate the cultural compatibility and strategies that are used in a cross culture environment. Negotiation and free trade analysis Globalization increasingly influences different countries in recent times, especially in the world of economics. Globalization is a force that amplifies and reinforces the strengths, but also contradicts the initial idea that the world is developing a single economy (Meunier, 2007). Since the advent of culture difference and profit imbalance, conflicts are frequently occurring in the negotiation process of the Free Trade Agreements and from this article, in regard to the agreement between the two countries, Radio host Alan Jones says that, ‘China are giving us nothing. The dairy farms are owned by China’. It is imperative to note that this comment among others that are likely to occur in the negotiations possibly are extreme and unilateral. This sets out a standard measure that outlines the prerequisites to any Free Trade Agreement. Among this is that, every agreement should balance both sides’ benefits and take into account the influences, the purpose of negotiation and that the concessions provide an improvement over the status quo for either sides or the involved parties (Ross, 1997). However, in the process of negotiation, it is hard to avoid the conflicts and negative comment as parties strive to arrive at a consensus and it is therefore advised that the managers should settle on an appropriate strategy that will expedite the negotiation process in consideration of success. Free trade occurs when there are no barriers and Government restrictions in form of bans that offer constraints to the flow of goods and services between trading nations (Baier, 2011). The benefits that encourage the free trade between these trading nations are factors such as increase in production and production efficiency, benefits to customers and creation of employment and more job opportunities. In addition, there is the expectation that free trade agreements will lead to eventual economic growth. After the FTA (Free-trade agreement) is completed, there are more than 90 percent of tariffs that will be canceled in the further four years in the area of beef, dairy and other agricultural products. This will create an implication that the economic communication will be more active than in the previous years. However, there still exists a certain defect in the free trade that impedes the developing of an economy when countries sign on such agreement. Although the FTAs (Free-trade agreements) have several benefits to the trading nations, the conflict can be regarded as a ‘zero-sum’ game, one in which any gain achieved by the other side is perceived a loss, of equal magnitude, to their own side (Ross,1997). Many of these agreements are as a result of promissory notes that are aired out during the campaign period. For instance, it was Tony Abbot’s pre-election pledge to secure at least three FTAs (Japan, Korea and China) within his first twelve months as the Prime Minister. What if he fails to deliver? In this regard, a much bigger threat looms on Australia’s angle and position of negotiating. The macro environment does not offer an enabling environment to the free trade due to the unfavourable conditions in Australia in relation to FTA negotiations. For an FTA to be of benevolence in Aussie, significant concessions by the Chinese Government ought to be put in place in the areas of agriculture and service provision. China has also been motivated to invest in the US Treasury bonds with an aim of recording higher returns in their enormous collection of foreign exchange reserves. However, the transition to this dream has not being a smooth one. The reality on the ground has been a game changer and has completely changed the course of this trade agreement. Import and export relevant to target market and culture There is a high probability that the Australian Government might be forced by circumstances created by the Chinese side to hold on to the ideas of sidelining tariffs on imports arising from Chinese automobiles. A similar case is recorded with Japan and Korea which as of now stands at 5%. However, the collapse of Australia’s car manufacturing industry provides this business opportunity for the Chinese negotiators who are expected to flourish their souls with this golden opportunity of being exporters to this type of industry. The bilateral agreement is expected to change the face of Aussie starting with the service industries, manufacturers, resources and energy, agriculture, education just to mention but a few. To exporters, the Free trade agreement will create jobs, boost the economic growth and create opportunities for new businesses. Labor is uncertain on how the FTA will create a big impact on the sugar industry and could as a result includes other extensions of the labor sector. However, despite all this positive effects arising from the bilateral agreement, certain aspects of the agreement are not clear. The agreement may tend to favour the Chinese at the expense of the Australians who are incapacitated to perform certain roles and obligations. In such a situation, a breach is likely to arise when the Australians for instance may tend to impose bans such as limiting migrants in certain areas. The agreement will promote further Chinese investment in Australia by improving the tourism sector where Australia is expected to play the host to Chinese nationalities. This will have a positive impact on the close business ties between the two nations. In addition, the free trade agreement is expected to maximize China’s exports to Australia ranging from electronics to telecommunication equipment and parts such as computers, clothing, domestic furniture and children’s goods which contribute to China’s top five exports to Aussie. A close analysis to this agreement will reveal to you that the Australian culture is expected to undergo through a series of changes. This is attributed to the fact there will be an influx of the Chinese flooding Australia’s local markets either as tourists or service men. China will get access to Australian products such as diary, meat, wine and these are expected to change the Chinese eating habits by wide and far. Conclusion The potential impact of the free trade agreement on Australia cannot be predicted and speculated at this stage.  In brief, recent scholarly works indicate that there is a likelihood of an hub-and-spoke effect on the free trade agreement where one country for instance Aussie will act as a hub by establishing two bilateral agreements with other countries that may retain and impose trade barriers to this Chinese agreement. If such happens, then the plans may not go as stipulated in the agreement and trouble is likely to occur. However, these scholarly studies do not include the rules of origin in their arguments which are important components of the agreement between two trading nations and again, they define the measures and standards with which an importing country will perceive a product originating from the other country as from a FTA partner (SAQIB, M., & CHAKRABORTY, D. 2005). While this new tone will no doubt be welcomed by China, the above changes in the external environment mean that the bargaining chip of investment liberalization is no longer as enticing as it once was. The conclusion is that while FTA negotiations may well be drawing to a close and an agreement of some sort soon signed, the prospect for a high quality Australia-China FTA remains as distant as ever (LEAHY, A. 2007). China has also offered Australia its best ever services commitments in an FTA (other than China’s agreements with Hong Kong and Macau) which includes new or significantly increased market access for Australian banks, insurers, securities and futures companies, law firms and professional service suppliers, education service exporters, as well as health, aged care, construction, manufacturing and telecommunication services businesses in China. Reference Baier, S, Bergstrand, H, Mariutto, R, 2011, ‘Economic Determinants of Free Trade Agreements Revisited: Distinguishing Sources of Interdependence’, pp.1-5 Meunier, S, 2007, ‘Managing Globalization? The EU in International Trade Negotiations*’, Princeton university, volume 45, no.4, pp. 905-926 Krugman, P, Venables, A, J, 1995, ‘globalization and the inequality of nations’, national bureau of economic research, pp.1-10 http://www.china.embassy.gov.au/bjng/relations2.html). Ross, L, 1997, ‘Reactive Devaluation in Negotiation and Conflict Resolution’, pp.27-28 YUN, C.-J. (2004). Rise of the Chinese economy and East Asian FTA: Japans strategic change and continuity. Bremen, Universität Bremen, Institut für Weltwirtschaft und Internationales Management. SAQIB, M., & CHAKRABORTY, D. (2005). India China free trade: examining the likely impact of the FTA. New Delhi, India-China Trade Centre. LEAHY, A. (2007). In the shadow of the China-Australia FTA negotiations: what Australian business thinks about IP. Melbourne, Vic, Melbourne Institute of Applied Economic and Social Research, University of Melbourne. HAO, Y. (2010). Macao and U.S.-China Relations. Lanham, Rowman & Littlefield Pub. Group. http://public.eblib.com/choice/publicfullrecord.aspx?p=662332. TANG, G., & PETRI, P. A. (2014). New directions in Asia-Pacific economic integration. http://www.ciaonet.org/book/ewc/0031940/index.html. Top of Form Bottom of Form Top of Form Bottom of Form Read More