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Bilateral and Regional Trade Agreements

Author

Listed:
  • Commission, Productivity

    () (Productivity Commission)

Abstract

The Productivity Commission was asked to examine the effects of bilateral and regional trade agreements, including on trade and investment barriers, regional integration and Australia's economy generally. The Commission concluded the benefits of these agreements have been oversold and the processes for developing them should be improved. The Commission found that while there is the potential for some gains from preferential agreements, unilateral reform and non-discriminatory trade liberalisation offer larger benefits. While tariff preferences in trade agreements can benefit some industries, the Commission found little evidence that Australia's recent bilateral agreements had provided substantial commercial benefits. The main factors that influence decisions to do business in other countries are likely to lie outside the scope of such agreements. The study concluded that while preferential trade agreements could increase national income, the net effect is likely to be modest. The study also found that some provisions included in Australia's recent preferential trade agreements — including investor-state dispute settlement mechanisms, government procurement requirements, intellectual property protections and provisions affecting areas traditionally the province of domestic policy, such as culture — potentially entail significant costs or risks. To ensure that options other than trade agreements are properly considered, and that any further agreements entered into are warranted, the study recommended that the Government make changes to its trade policy development processes. Under the Commission's proposals, the Government would undertake an annual Trade Policy Review to better identify priorities, enhance the value of consultation and consider trade policy in a broader context. And where there is an interest in pursuing a trade agreement with particular countries, economic assessments should be based on realistic scenarios with any modelling overseen by an independent body. Final assessments to government should be based on the negotiated text of the agreement.

Suggested Citation

  • Commission, Productivity, 2010. "Bilateral and Regional Trade Agreements," Research Reports, Productivity Commission, Government of Australia, number 43.
  • Handle: RePEc:ris:prodcs:0043
    as

    Download full text from publisher

    File URL: http://www.pc.gov.au/__data/assets/pdf_file/0010/104203/trade-agreements-report.pdf
    File Function: Full PDF of report
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    File URL: http://www.pc.gov.au/projects/study/trade-agreements/report
    File Function: Publication webpage
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    Citations

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    Cited by:

    1. Handley, Kyle, 2014. "Exporting under trade policy uncertainty: Theory and evidence," Journal of International Economics, Elsevier, vol. 94(1), pages 50-66.
    2. Valdés, Raymundo & Tavengwa, Runyowa, 2012. "Intellectual property provisions in regional trade agreements," WTO Staff Working Papers ERSD-2012-21, World Trade Organization (WTO), Economic Research and Statistics Division.
    3. Valdés, Raymundo & McCann, Maegan, 2014. "Intellectual property provisions in regional trade agreements: Revision and update," WTO Staff Working Papers ERSD-2014-14, World Trade Organization (WTO), Economic Research and Statistics Division.

    More about this item

    Keywords

    bilateral trade; regional trade; trade liberalisation; investment barriers; trade barriers; bilateral agreements; tariff reductions;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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