Free trade agreements Essay Example

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Free trade agreements 6

Free trade agreements

Free trade agreements

Free trade agreements are the voluntary agreements that involve two or more countries with the aim of improving the business between the two countries.1 These agreements try to eliminate barriers that will hinder trade between the countries like restrictions on importing or exporting products between the countries. Moreover, the free trade agreements protect the patent rights of individuals and offers guidelines for foreign investments. It involves the sharing of business ideas, eliminating custom barriers and protects the patent rights or intellectual rights of individuals from being exhausted by imitators.2 As a result of these free trade agreements, many organizations are using this opportunity to expand their businesses by the application of franchising or licensing methods of expanding their businesses. The franchising and licensing methods used include using the brand name, trademarks and the intellectual ideas of individuals.3

Free trade agreements between Australia and other countries have led to tremendous importance to the companies of Australia. These opportunities include the expansion of businesses because the agreements promote a favorable environment for the investors.4 Besides investment opportunities, free trade agreements promote good understanding between the two countries which leads to expansion of the Australia’s companies to international markets because the barriers to international trade have been eliminated and companies can easily venture into international markets. Some of the free trade agreements that Australia has entered include the following;

The Association of South East Asian Nations –Australia New Zealand free trade area (AANZFTA)

The Australian – Chile free trade agreement (ACI-FTA)5

The Australia-United States free trade agreement (AUSFTA)

The Australia- Thailand free trade agreement (TAFTA)

The Singapore-Australia free trade agreement (SAFTA)

The Australia-New Zealand closer economic agreement (ANZCERTA)

However, there are other ongoing negotiations between Australia and other countries like the partnership agreement between Australia and Indonesia. The various importances of the above free trade agreements between Australia and other countries are illustrated in the comprehensive explanation below;

The free trade agreement between Australia and Chile in the year 2009, has improved the trade between the two countries.6 These free trade agreements have eliminated barriers to trade between the two countries and thus there is free mobility of factors of production as well as the intellectual experiences. The agreement has created opportunities for expansion of businesses through franchising and licensing. Furthermore this free trade agreement has led to easy movement of people by getting working permit easily to work and trade anywhere between the two countries and therefore it is easier to open a new business in the other country.7 For example Amcor packaging company has greatly benefited from these free trade agreements as it has been able to operate in more than 42 countries and this has enabled through trade agreements. The Amcor packaging company has expanded its business in Chile and has franchisee there. This expansion was made possible because of the free trade agreement that eliminated barriers to international trade like laws.

The free trade agreement between Singapore and Australia also has made it easier for businesses to expand their operations.8 This agreement has made it easier for the investors of Australia to get knowledge about the Singapore market opportunities and exploited the opportunities. This agreement expanded the relationship that existed between the two countries in world trade organization leading to the expansion of businesses. For instance, cartridge Company has been able to franchise with Singapore businesses due to the trade agreement between the two countries. The Company benefits from accessing the ports of Singapore to import their materials as well with less barriers hence the franchisee operate smoothly between the two countries.

The Thailand-Australia free trade agreement on the other hand has promoted the franchising and licensing businesses of Australia by strengthening the business relationship between Australia and Thailand.9 This agreement eliminated the trading and franchising barriers like the work and travel permits. This led to free movement of people and goods within the countries and improved the business operations. For instance, the Gloria Jeans of Australia was able to enter into the Thailand market as a result of this trade agreement. Thailand eliminated the business barrier which made it easier for Gloria jeans to franchise with businesses in Thailand hence expanded their market.

The free trade agreement between Australia and the United States has led to equal treatment of the trading partners between the two countries.10 It led to protection of intellectual ideas from being exploited and eliminated the movement barriers which led improved businesses. Different business cultures between the two countries are slowly being eliminated by the trade agreement.11 For example, Hog breathe cafe benefited from this agreement and expanded into the American market because the countries amended their laws to accommodate the free trade agreement signed.

On the other hand, free trade agreement between Australia and New Zealand has benefited the franchise and licensing businesses in Australia in that the costs of operating a business in another country was lowered.12 Taxation rate was lowered and this enticed many investors to operate in the New Zealand market. For instance, Amcor Company was able to enter into the New Zealand market because it was able to get license of operating there and that the tax rates for a franchise from Australia was favorable.13 This agreement also led to protection of the intellectual property thus the patent rights could be violated between the two countries.

Free trade agreements between Australia and other countries has led to improvement of the businesses of Australia especially the franchise and licensing business companies. The free trade agreements eliminate barriers that affect the trading operations for instance different laws of the different countries, difficulty in getting a work permit to operate a business in a foreign country, exploitation of intellectual property and taxation rate of operating a business in a foreign country.14 These barriers have been eliminated by the free trade agreements between Australia and other countries and they have led to the expansion of businesses to international markets. However, the drawback of these agreements is the exposure of technology knowhow to competitors leading to imitations in the businesses.

References

Austrade 2011, Australia New Zealand Closer Economic Agreement (ANZCEA),

viewed 18th May 2013 from <http://www.austrade.gov.au/ANZCERTA/default.aspx#Business_travel

Cronk, H & Wickramasekera, K 2012, Global Business Today, Pearson Education

Australia, French Forest.

Department of Foreign Affairs and Trade website 2010a, Background of the Singapore-Australia Free Trade Agreement, viewed 18th may 2013 from http://www.dfat.gov.au/fta/safta/background.html

Department of Foreign Affairs and Trade 2011b, Australia Trade Agreement, viewed 18th may 2013 from http://www.dfat.gov.au/fta/

Department of foreign affairs and trade 2011c, FAT. Chile country brief, viewed 18th may 2013 from<http://www.dfat.gov.au/geo/chile/chile_brief.html>

Department of foreign affairs and trade 2011d, FAT, Thailand country brief, viewed 18th

May 2013, http://www.dfat.gov.au/geo/thailand/thailand_brief.html

Department of Foreign Affairs and Trade 2011e, Key Outcomes of the Thailand-Australia Free Trade Agreement, viewed 18th may 2013 from

<http://www.dfat.gov.au/fta/tafta/key-outcomes.html>

Department of Foreign Affairs and Trade 2011f, Australia United States Free Trade Agreement: Fact Sheets, viewed 18th may 2013 from <http://www.dfat.gov.au/fta/ausfta/outcomes/01_overview.html>

Faunce, T., Bai, J & Nguyen, D 2010, Impact of the Australia-US Free Trade Agreement

On Australian medicines regulation and prices. Journal of Generic Medicines, Vol. 7, No. 1, pp. 18-29.

Gemma, D 2010, Asean, Australia, New Zealand Sign Free-Trade Deal (Update1). Bloomberg.

Peter, S 2004, Australia-United States Free Trade Agreement and the Australian

Pharmaceutical Benefits Scheme, Yale Journal of Health Policy, Law, and Ethics,

Vol. 4, No. 2, p. 102-321.

1
Cronk, H & Wickramasekera, K 2012, Global Business Today, Pearson Education

Australia, French Forest.

2
Peter, S 2004, Australia-United States Free Trade Agreement and the Australian

Pharmaceutical Benefits Scheme, Yale Journal of Health Policy, Law, and Ethics,

Vol. 4, No. 2, p. 102-321.

3
Austrade 2011, Australia New Zealand Closer Economic Agreement (ANZCEA),

viewed 18th May 2013 from <http://www.austrade.gov.au/ANZCERTA/default.aspx#Business_travel

4
Department of Foreign Affairs and Trade 2011b, Australia Trade Agreement, viewed 18th may 2013 from http://www.dfat.gov.au/fta/

5
Department of foreign affairs and trade 2011c, FAT. Chile country brief, viewed 18th may 2013 from<http://www.dfat.gov.au/geo/chile/chile_brief.html>

6
Department of foreign affairs and trade 2011c, FAT. Chile country brief, viewed 18th may 2013 from<http://www.dfat.gov.au/geo/chile/chile_brief.html>

7
Department of foreign affairs and trade 2011c, FAT. Chile country brief, viewed 18th may 2013 from<http://www.dfat.gov.au/geo/chile/chile_brief.html>

8
Department of Foreign Affairs and Trade website 2010a, Background of the Singapore-Australia Free Trade Agreement, viewed 18th may 2013 from http://www.dfat.gov.au/fta/safta/background.html

9
Department of Foreign Affairs and Trade 2011e, Key Outcomes of the Thailand-Australia Free Trade Agreement, viewed 18th may 2013 from

<http://www.dfat.gov.au/fta/tafta/key-outcomes.html>

10
Peter, S 2004, Australia-United States Free Trade Agreement and the Australian

Pharmaceutical Benefits Scheme, Yale Journal of Health Policy, Law, and Ethics,

Vol. 4, No. 2, p. 102-321.

11
Faunce, T., Bai, J & Nguyen, D 2010, Impact of the Australia-US Free Trade Agreement

On Australian medicines regulation and prices. Journal of Generic Medicines, Vol. 7, No. 1, pp. 18-29.

12
Gemma, D 2010, Asean, Australia, New Zealand Sign Free-Trade Deal (Update1). Bloomberg.

13
Department of Foreign Affairs and Trade 2011f, Australia United States Free Trade Agreement: Fact Sheets, viewed 18th may 2013 from <http://www.dfat.gov.au/fta/ausfta/outcomes/01_overview.html>

14
Gemma, D 2010, Asean, Australia, New Zealand Sign Free-Trade Deal (Update1). Bloomberg.