A Comparative Narrative - Term Paper Example

? A Comparative Narrative Introduction Business relationships between two countries can be demarcated as an important constituent in the modern day context. The barriers of trade between two countries have minimized drastically in recent times. The trade relationship between the United States and Australia has always been on the positive side. Both the countries have an open economy. Their relations have enhanced rapidly after the free trade agreement between them, which reduced their existing trade barriers (Berkelmans, Davis, McKibbin & Stoeckel, 2001, pp. 1-112). On the other hand, trade relation between China and the US has been a topic of serious discussion in recent times. Due to sustained growth in economies of both the countries, there has been a considerable enhancement in import and export activities between them (Wang, 2010, pp. 165-210). This paper intends to analyze the present trade or business relations between the countries of China and Australia with the US. Furthermore, the paper would aim to present a comparative analysis with regard to the business relationship between Australia-US and China-US. Discussion Trade is an important aspect for economy of any country. In the modern day context, trade between countries has expanded rapidly primarily owing to the enhanced globalization. In this portion of the paper, the trade relations of Australia and China with US would be exemplified. Trade Relations of Australia with the US The two nations i.e. Australia and the United stated share a healthy trade relationship. Both the countries share many cultural and traditional values among them. Trade is equally important to both the countries. Approximately 11% of the Australian exports are conducted with the United States. Moreover, the United States is the origin of one-fifth of the imports of Australia (Garnaut, 2002, pp. 123-141). The US is one of the major single investors in Australia. The main source of finance of Australian’s firms is from the US investors. The extent of merchandise and services trade between the two countries is quite positive. It was observed that in the year 1999, the total trade involving the two countries was valued at around US$23.3 billion. 90 % of trade deficit between the two countries is in terms of merchandise and the remaining 10% is of services (Berkelmans, Davis, McKibbin & Stoeckel, 2001, pp. 1-112). Both the countries possess an open economy. To enhance their relation in terms of business, the two countries have undergone a free trade agreement (FTA) to minimize the existing trade barriers between them by a considerable extent. Both the countries have been recognized to be aware of the economic gains that would arise from the agreement. After the agreement both the countries have experienced an increase in welfare (i.e. distinguished by household consumption) and production (i.e. recognized by GDP) due to the reduced barriers. Australian welfare continued to rise from 0.3 percent to 0.5 percent. After the agreement, Australia enjoyed a US$2 billion annual increase in Gross Domestic Product (GDP) i.e. 0.33 percent increase. Similarly, the US also experienced an increase of US$2.1 billion annually in their GDP i.e. 0.02 percent increase. It can be seen from the GDP scenario that the Australian economy was more benefitted by the trade agreement than the US economy. Overall, there was an optimistic economic gain for both the Australian and the US economy from the trade agreement. The undertaking of the agreement would further increase the trade among the two nations in the future (Berkelmans, Davis, McKibbin, & Stoeckel, 2001, pp. 1-112). Nevertheless, there are certain barriers in relation to trade that prevail among the two nations. For the United States, the trade of dairy, sugar, shipping and commercial vehicles has certain barriers. The barriers to Australian sugar exports generate from high tariff which is almost equal to 80%. There are certain other barriers on trade of cotton, financial and metals services among others that exist for Australian companies in the US. On the other hand, for Australia, the barriers include in trade of products such as textiles, clothing and footwear among others. Conversely, trade of cheese, wood and chemicals also have certain barriers. These barriers would certainly decline in course of time (Stoler, 2013; Berkelmans, Davis, McKibbin & Stoeckel, 2001, pp. 1-112). Trade Relation of China and the US The trade relations between China and US have witnessed certain distinct evolution in recent times. As on the month of January 2000, the People’ Republic of China was the third major buyer of the US goods and services. On the other hand, the US was the second major export-market for China. It was observed that the amount of trade amid the two nations increased up to 285.3 billion USD by the year 2006 which was more by 60,702 times from the figure estimated in the year 1971. The trade volume between the two nations had increased from 5 billion in the year 1991 to 503 billion in 2010. This was a dramatic increase in trade between any countries (Wang, 2010, pp. 165-210). Trade in the periphery of services between the two nations has increased considerably in the past decades. The United States was one of the major export markets for China. In 2009, it was observed that 19.3% of America’s merchandise came from China. Conversely, China had to rely on the United States for 18.4 percent of its merchandise. Over the years, on an average China has supplied an additional US$11.8 billion imports to the US economy. During the extraordinary growth in their trade, both the countries have invested openly on to each other’s economy. As a result of the fact that the US imports from China have grown much more speedily than US exports to China, the trade scarcity of the US merchandise has increased from US$10 billion to US$196 billion. The rapid pace of increase in business amid the two economies, benefitting both the sides, has made the trade relationship complex (Morrison, 2012, pp.1-51). Nevertheless, there are certain issues that have appeared within the existing trade relations. Incomplete transition of China in the free market economy and its constant utilization of distortive economic policies have increasingly stressed their business relation with the United States. Many US analysts hold the notion that these policies were harmful to the US. Apart from these, China’s failure to provide ample protection to the US intellectual property rights was also an issue raised by the US. Moreover, the currency policy of the government of China to limit the Renminbi (RMB) against Dollar and other currencies to make China’s export industries globally competitive was also an issue for the US. Nonetheless, the government of China responded to these issues by arguing that they have neither discriminated against foreign firms nor have they violated global trade rules (Morrison, 2012, pp.1-51). Comparative Narration of Australia-US and China-US Trade Relations The business relations between US and Australia have witnessed a considerable improvement in the recent years. While the trade relations between China and US have been observed to undergo a tremendous growth from 1991 to 2010. Both the countries have rendered active participation in their trade activities and in the process both the economies have been heavily benefitted. On the other hand, the trade relation between the Australia and the US is observed to be more fairly beneficial to the Australian economy than the US economy. Conclusion It has been observed from the entire discussion that trade relations have a major part to play in the development of an economy. For both Australia-US trade relations and the China-US trade relations, the common feature has been that both the economies involved in trade have received considerable amount of benefits. It has further been observed that the volume of trade between China and the US has increased at an incredible pace. However, there were certain issues between the two nations, which might affect their trade, if not rectified promptly. On the other hand, it has been noticeable that the business relations between Australia and the US have shown a substantial growth after the free trade agreement between the two countries. The agreement had been effective in minimizing the barriers amid the two nations. References Berkelmans, L., Davis, L., McKibbin, W., & Stoeckel, A. (2001). Economic impacts of an Australia-United States free trade area. Centre for International Economics Canberra & Sydney, pp. 1-112. Garnaut, R. (2002). An Australia-United States Free Trade Agreement. Australian Journal of International Affairs 56 (1), pp. 123-141. Morrison, W. M. (2012). China-US trade issues. Congressional Research Service, pp. 1-51. Stoler, A.L. (2013). Australia-US free trade: Benefits and costs of an agreement. Institute of International Economics, pp. 1-22. Wang, D. (2010). China’s Trade Relation with the United States in Perspective. Journal of Current Chinese Affairs, pp. 165-210. Read More