Foreign Affairs and Trade - Sample Essay

Many European countries have double digit unemployment, some as high as 20 per cent. In some cases, the benefits of export growth have been translated into higher wages rather than more jobs. Without export growth, unemployment rates are likely to have been higher and the benefits to workers lower during this period of major change. These points were backed up in case study research by the Department of Foreign Affairs and Trade. Some firms say that more open markets here and offshore have led to growth in exports and growth in employment.

(Firms in agriculture, food processing, household products, TCF, shipbuilding, motor vehicles, autoparts, pharmaceuticals, education and training, software, heavy engineering, tourism, health services, environmental services and telecommunications indicated this during case study research). Even more firms, however, said that productivity improvements meant that more open markets had not delivered increased employment but had enabled employment levels to be maintained in the face of tough competition.

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Enhanced job security had resulted with possible employment growth to come (firms in forest products, food processing, tourism, electrical equipment manufacture, autoparts, IT, building and construction, mining, engineering and specialist equipment manufacture). Some firms remain at much lower employment levels than was the case before liberalisation and associated productivity improvements (firms in processed food, TCF, financial services, metals manufacture, autoparts, specialist machinery, electrical equipment).

Still others say that employment is down and unlikely to grow for quite some time while there are still substantial productivity improvements to be made in order to deliver growth (firms in agrifood, TCF, mining, metals manufacture, autoparts, telecommunications equipment, whitegoods). ERA- Effective Rate of Assistance Despite perceptions to the contrary, the Australian manufacturing sector has continued to grow even in the face of substantial reductions in trade protection. The misperception is partly fuelled by falls in manufacturing as a percentage of the total economy.

The service sector has, in recent years, grown faster in output and employment than manufacturing, thereby increasing its share of the total economy. This trend is not peculiar to Australia but has been experienced by many industrial economies and is due primarily to improved technology in production of manufactured goods. In employment data, many jobs that used to be part of manufacturing firms (and were counted as manufacturing jobs) are now outsourced to specialist services firms and counted as services jobs (eg in accounting, design, distribution, transport and training).

The past decade has also seen improvements in the export performance of Australia’s manufacturing sector. In 1985 manufactured products comprised less than 10 per cent of total goods and services exports. By 1995 this had grown to around 20 per cent. Australia has improved its competitiveness and increased exports in many industries not traditionally thought of as Australian exporters.

Fastest growing exports over the past 5 years have included a range of elaborately transformed manufactures (ETMs) such as electricity distributing equipment (average annual trend growth since 1991-92 of 30. 8 per cent); sporting goods (28. 3 per cent); heating and cooling equipment (26. 5 per cent) computer equipment and office machinery parts (25. 1 per cent); industry-specific machinery (24. 9 per cent); medicaments, including veterinary (22. 4 per cent); medical instruments (20. 4 per cent); telecommunications equipment (19. 8 per cent); computers (19. 6 per cent).

Taking IT products as one of the abovementioned examples, while Australia is a net importer of information technology and telecommunications products, exports in this sector are growing very rapidly, having doubled between 1992 and 1996 to more than $1.8 billion, and there are significant further benefits for Australia in the Information Technology Agreement (ITA) in the WTO, which will create new employment opportunities for this fast-growing export industry. Reducing Australia’s tariffs on basic business inputs such as information technology and telecommunications equipment, would also lower costs for Australian industry.

Processed food products have also grown strongly such as milk and cream products (20. 4 per cent); cheese (17. 7 per cent); alcoholic beverages (14. 1 per cent); cereal preparations (10. 1 per cent). Some industries that many think Australia is uncompetitive in have actually displayed above average export growth (such as engines, other car parts and passenger motor vehicles), although these industries benefit from assistance that imposes costs on other industries. Last year (1996) automotive exports were over $2. 3 billion, a five-fold increase over the level ten years ago.

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