Philippine E-Journals

Australia - ASEAN Preferential Trade: Its Problems and Prospects

Jose L. Tongzon

Discipline: Economics, Social Science, Cultural Studies

 

Abstract:

More access for ASEAN manufacturers in the Australian market is an essential element in ASEAN countries' export-oriented industrialization and export market diversification program. Its significance also emanates from their continuing trade imbalance with Australia. On the other hand, this issue concerns Australia because an improved market access for ASEAN manufactures can greatly contribute to the enhancement of Australia-ASEAN relations (already marred by ASEAN's accusations of Australia's protectionist policies), apart from the economic benefits associated with trade. In the context of Australia's problem of slow growth and growing unemployment, a discriminate reduction of its trade barriers in favour of the developing countries may be more likely than nondiscriminate trade liberalization if it limits the impact of trade liberalization on domestic industries. Thus, the efficacy of Australia's preferences is of particular importance. This is the theme of this paper. It first describes the rationale for the adoption of an export-oriented industrialization and market diversification policy by the ASEAN countries, and then reviews Australia's cautious response to ASEAN's thrust for market access.