Australia’s Pursuit of Free and Open Trade: Introducing the Simplified Trade System
Australia is paving the way for a simplified trade system that could revolutionize international trade. Since the 1980s, the country has undergone a significant economic transformation, moving from a protected, inward-looking economy to an open and competitive one. With the highest tariff rate now at just 5 percent, Australia has made great strides in reducing trade barriers.
However, despite the initial success of these reforms, Australia has seen a decline in productivity growth over the past decade. To combat this, the country is turning to trade facilitation through the implementation of a Simplified Trade System.
In the digital age, Australia’s current system of clearing imports and exports is outdated and inefficient. With multiple trade-related government ICT systems in place, many of which rely on manual processing and lack interoperability, importers and exporters are burdened with redundant paperwork. The Simplified Trade System aims to streamline this process and reduce costs associated with international trade.
Australia’s pursuit of a simplified trade system aligns with global efforts towards trade liberalization. The World Trade Organization (WTO) introduced the Trade Facilitation Agreement in 2017, which led to a 5 percent increase in global agricultural trade and a 1.5 percent increase in manufacturing exports. These gains were particularly significant in least developed countries.
By developing best-practice technologies and processes through the implementation of the Simplified Trade System, Australia can support further liberalization of trade not only domestically but also within the Asia-Pacific Economic Cooperation (APEC) region and beyond. Drawing on the experiences of economies such as Singapore, Japan, South Korea, Hong Kong, China, and the United States, Australia can set an example and share its advancements with other APEC economies.
With an annual merchandise trade exceeding AU$1 trillion, Australia stands to benefit greatly from a simplified trade system. By reducing transaction costs, complex regulations, and deadweight losses, Australian exports can become more competitive, while the cost of imports will be lowered. These improvements will undoubtedly contribute to the country’s economy and promote national welfare.
As Australia embraces the next frontier of trade simplification, it is essential to maintain a balanced perspective. While trade liberalization and simplified trade systems offer tremendous opportunities, it is crucial to consider the potential challenges and implications of such reforms. By approaching this journey with careful consideration and collaboration, Australia can establish itself as a leader in free and open trade, fostering economic growth and prosperity for all.
