Australia's population is roughy 20 million. That's roughly the population of my home state of Pennsylvania (12 million) and neighboring Ohio (11 mil) combined and spread out over a land mass roughly the exact size of the United States.

Just over 1/4 the country's population lives in just 2 cities (Melborne & Sydney). Because of it's small population, manufactured goods tend to be more expensive there than we get here in the states since costs are spread over fewer manufactured goods.

Conclusions:
1. Australia suddenly dropping it's tarriffs will pretty much wipe out a sizeable portion of it's manufacturing base, so it needs to phase things in.

2. Australia, because of it's very small market will benefit more by exporting to the US than the US will by exporting to Australia.

Benefits:
1. Australia will have a far greater variety of manufactured goods available, and possibly lower prices as well, and the US will have a new (if small) market to sell it's goods.

2. Even though some Aussie industries may fold because of some cheaper US made goods being imported, that's likely to be more than offset by increased employment in other areas (ie: automobiles) that could more than make up for it.

3. Australia may infact end their "Population crisis" by an influx of skilled labor from the US.

It's something that can benefit both countries. But when you are comparing a market the size of the US and one roughly the size of New Jersey, it isn't going to make a huge difference to us if they phase out their tarriffs over a reasonable period of time.

 

Aus got a Raw deal when it comes to agriculture.

A lot of tariffs remain, and the ones that are dropping are phasing out over 15 years!

Where as the US has free access to our agricultural markets.

 

I think you need to understand our position in the world.

First, our GDP is larger than the next FIVE countries combined, and depending on the Euro/dollar comparison, larger than the ENTIRE European Union's. Austrailia's GDP is smaller than that of a sizeable number of US states. I'd bet Michigan's GDP is larger than Austrailia's.

Being a trading partner with the US is kind of like being in a small room with an elephant. No matter how kindly the elephant is, one needs to be careful to avoid being overwhelmed.

A gradual phase-in only makes sense, from both perspectives. Destroying the Austrailian economy in our pursuit of free trade by overwhelming them in the short term doesn't make sense.

So, we sacrifice a little bit (it's honestly a flea bite on the aforementioned elephant..), take a little bit of a tweak economically for a few years (a VERY tiny one), while our great friends down under get some time to adjust.

In the end, we are all better for it. The Aussie economy strengthens, and so does ours.

Hopefully, someday my vision comes true. Politically, it is my great hope, and this is a very positive step.

 

Please don't take this wrong Anthony...

Give it a little bit of time. One thing that folks don't tend to appreciate is the fact that the US feeds a sizeable portion of the world.

There will be some give and take, and our exposing one of the sectors of our economy that is being very heavily pressured (manufacturing), is a gesture of good faith.

Call your political leaders and IMPLORE THEM to demand Aussie participation in NAFTA.

 

I just don't think it should be called a free trade agreement because alot of tarrifs still remain with no "Phase Out Time".



http://www.theage.com.au/articles/20...?from=storyrhs

 

uh, not quite. china and japan combined are only about 800 billion behind the US. throw in australia and its about equal. then if you consider that china's GDP is growing at 8-10% year-on-year it dawns on you that by 2010 China is more than likely going to surpass the US as the largest economy in the world. so time to stick your head out of the sand there...

on the other points, our industries are being eroded constantly BECAUSE we have no tarriffs on anything. everyone sells everything here on almost equal footing with domestic industries, which is unparalleled anywhere else in the world. this is going to kill the US economy in the long run.

its a good point that australia is small and that we don't generally benifit much by doing business with them. but by the same token neither do we benifit much by doing busienss with Canada and Mexico wich both happen to have the same GDP and have no trade bariers with us as per NAFTA.

but my comment was that its true in general that our trade partners get a better deal as far as access to market. we have a bewildering export deficit. we import more than twice the amount of goods we export. if the US was a business, lets say GM, that would mean that we buy twice as many parts as we need to actually build the amount of cars that we sell, EACH YEAR. its no joke. this country is going to $hit within a decade if things don't turn around fast.

 

http://www.econedlink.org/lessons/in...m?lesson=EM518

Bottom of the page. Shows China, Hong Kong, France, Germany and the US.

You do the math. The data is from the September 26th, 2003 report.

China's economy is one NINTH the size of the United States. Chinese individual productivity is is one THIRTYSIXTH that of the average US citizen.

Germany's economy is less than one FIFTH the size of the US economy. We're not going to be caught anytime soon.


Multiply China's economy by EIGHT and add in Austrailia and you're getting close.

 

those are not real GDP numbers. real being a term used to describe the ability to purchase goods and services within the country of interest. while china's "actual" GDP may be 1/9th that of the US in US currency this number is meaningless because they also don't pay $1600 USD in rent every month. therefore, REAL GDP is used to peg the well being of the economy. based on REAL GDP, china is at the 6 trillion dollar mark and growing steady. yes, per capita in china is low you have a point there. but when you consider that the chinese government also keeps the value of their currency artificially low, by some accounts by as much as 1/3 its actual current value, then its clear that they get away with selling us goods at much higher rates than it actually costs them to make. in effect, everything we buy from china is at a 300% markup! that's on top of the fact that they are also selling us twice as many goods as we are selling them.

so tell me, who's getting the raw end of the deal there?

http://www.cia.gov/cia/publications/.../2001rank.html

 

Throwing China & Japan into this conversation regarding Austraila is a little unfair to say the least.

China has a population of a billion and a third people, yet has a economy that is peanuts compared to the US and it's mere 250 million. This means that even if China was wealthy enough to buy everything we could produce in the US, there is no way imaginable that we could hope to do more than just scratch the surface of their market simply because of the shear number of potential buyers.

On the flip side of the same thought, if China had the production capability and the economic strength relative to their population that we have and we had our economy suddenly opened, it would be no contest. Our economy would be toast!

To a lesser degree, that's the situation Australia's in with this agreement. They are taking a pretty serious risk going into a free trade with the US simply because their market is extremely small. Though the risk is no where near as serious as it would be if they opened their markets to say India, Malayisa, or Thailand, which has drastically lower labor costs.

On Japan, it's a very rich nation with a nearly insane consumer market. It also has protectionist tarriffs that rival what we had in the early 80s, especially regarding automobiles. Just like here in the US, our cars reputation of being inferior doesn't help people's opinions and compounds things for us. So does Japan's long term recession which gives a continuous reason to them not to drop tarriffs, and their high yen rates to our dollar that makes our stuff artificially expensive.

China's a 3rd world nation with a monsterous population, dirt cheap labor, and a puny economy. Japan is a nation on par with the US, has half the US's population jammed in an area the size of California, comparativly expensive labor, and an economy that is, for it's population, our rival.

Australia on the other hand, is nearly a dead ringer for the US from labor to manufacturing, raw materials and it's agriculture. But because of it's very small population, it doesn't have a huge economy.

BTW, did anyone know that Australia gets roughly 95% of all their fuel from.....Austraila!

Australia for all intents and purposes is energy independent

 

fine, you want to avoid my points, I won't drag this out any further. my gripes had little to do with australia and its unique situation and more with US foreign economic and trade policies in general. it was a comment I thought everyone would skip over anyway and in hindsight it isn't exactly on topic in the australia specific FTA thread.

but I will say, you guys are way too optimistic about the US staying on top if current trends continue for any time at all. blindly optimistic. the numbers you guys keep bringing up are outdated by at least 10 years. US pop is closer to 300 mill than 250. A LOT closer. almost a 10 million increase in only the last 3 years according to the census bureau!! and its getting worse every year, faster and faster. in 10-15 years US pop is projected to be 350 million. so if you think about it, we are moving closer and closer to china every year economically. obviously it will never be AS bad, but its going to get bad nontheless.

take a closer look at what's really going on. that's all I'm saying.

 

Interesting stuff here to be sure,and a fine discussion. I would only add that the pontential of the Chinese market is mind-boggling and that US corporations are doing well at setting themselves up to serve the increasing consumer demand there. The words "global economy" are becoming truer every year,in an irreversible albeit painful process.

 

Those ARE real GDP numbers and denote the size of the economies in question. No number games, no BS - simply the GDP.

It has been looked into, and I'm finding the tone of your posts to verge on hysterics.

The sky is not falling. The world is not ending. The United States stands alone atop the world economically. We're more productive and more efficient.

China, on the other hand, better figure out how to FEED everybody with some regularity before we start going into spasms about being overtaken.

 

did you even read my post? the numbers you sited mean nothing.

the "it has been looked into" line is classic though. did you form a committee to analyze the tone of my posts?

 

morb|d, I understand your point that you don't believe the GDP is an accurate number because in any individual country, a lower GDP doesn't reflect actual "man on the street costs" (lower GDP in a country is offset in that country by lower actual costs to it's residents). If I'm reading you right, you believe that it's simply the strength of the dollar that is where we gain our economic strength, and you are partially right. But you can also look at quality of life and our ability to buy as another measurement.

The poorest people in this country have a television and some household goods, and perhaps even a beaten up old car. That person buys food from a market or grocery store, and on occasion has a McDonald sandwich. Yet in certain other countries, that would constitute a decidedly middle class person, even though those same things are far cheaper in his respective country.

Perhaps a middle class person in China won't be paying the $900 per month rent I'm paying for my place in Marina, but his rent isn't likely to include a swimming pool, a grounds keeper, a laundry, sewage, water, and cable. He also isn't likely to have 2 cars, 2 TVs, and more consumer goods than Tyler Derden started off with in the movie "Fight Club". Just comparing earning classes provides a stark comparison between our buying power. Let's not even start comparing the buying power of the top 1/3 of each country.

I'm not saying that we can't be hurt economically. But it's going to take a whole lot more than a few tarriffs to do it:

*Massive budget deficits take money away from the private sector meaning businesses & consumers.

*Not requiring foreign companies that do business here to have some facilities here sends our money out of the country.

*Allowing our companies unrestricted freedom to relocate operations in 3rd world nations puts a larger burden on government budgets by sending people to lower paying jobs sending in less taxes.


*And finally, perhaps the biggest threat of them all: automation & increased efficiency. Fewer people doing more work helped by automated equptment. Look at how few people it takes to assemble cars compared to 20 or 30 years ago, or how many jobs are running on less than half the staff it once did. How hard is it to find a real person when you call up about a bill or a bank statement? Executives get rewards and bonuses for finding ways to cut payroll & maintain production and increase profits.

IMHO, the problem isn't China, Mexico, or tarriffs. It's the fact that no one has yet decided at what point should we be willing to pay retirement & benefits and forgo efficiency at any costs. The people that we engineer out of work have to go somewhere, and they aren't going to be buying as much in the process. That's lowers sales, increases the pressure to cut cost to maintain inflated profits, and on and on...

China has the potential to be a threat economically. But it would take a combination of us screwing up our economy here, us letting our businesses run wild, and China managing to become a economic and manufacturing powerhouse with a standard of living approaching the US (realistically, the latter isn't very likely in our lifetimes).

 

Very American cross section here, guys. I'm reading some posts from people with an understanding of America and its global hegemony (stop standing on ceremony, bury the lingering War of Independence cringe and call it an Empire, for God's sake) and some who don't understand the US involvement in many areas of the world - for better and for worse.

It isn't a philosophically sustainable stance to suggest that the US shouldn't be pulling down its protection barriers. Why? Because the International Monetary Fund, which is controlled by the US Treasury Dept, essentially imposes the "removable of tariffs and regulatory hurdles" regime on countries around the world. It doesn't stop at trade in manufactured goods, but extends to everything from stock markets to currency trading. it demands that all countries adhere to a philosophy that market forces can be trusted and are pure and that's how all countries should operate. South East Asian financial crisis ring any bells? Argentina? Russia? Right.

Australia has no population crisis as such. We could probably do with another five million or so, but that'd be the maxxed figure. The country is geologically older than the US, its topsoil is not as deep, its inland areas largely arid. While four or five million live in sydney, three mill live in melbourne, another two in brisbane. apart from patches around Perth and Adelaide, everybody else clings to the Eastern Seaboard, because that's where the water is. That's why we don't need a lot more people, and we especially don't need them heading to sydney, brisbane or melbourne. Sydney, especially, is full, and its real estate prices are out of control. you can't buy a decent house within 10km of the cbd for under A$1 mill.

Now, American cars imported to Australia really wouldn't sell anyway. not in significant numbers. We're not a truck-based market. We're a car-based market, and the US doesn't even build cars that the US wants. We have a mature, relatively sophisticated mix of local, japanese and european cars and, quite frankly, the US stuff i've driven (and i've driven lots of it) wouldn't cut it here. The big truck stuff is too big for our environment and road architecture. An F250 looks out of place because it's too big and the Suburban bombed big time.

The only thing that may happen in the short term would be cadillac to oz, but we're a right hand drive market, cadillac's only got one right hooker, and nobody's going to launch a brand with only one model.

Our car tariffs have been scaling back since the mid eighties anyway, and are planned to be, off the top of my head, at 5 percent by 2010.

The smart money would be on an increase in parts and, depending on currency hedging, a flow back to the US of the same. Still, it won't make a dent in you guys. 18000 GTOs? they'll shift that supposedly annual quota (arrived at via union pressure, not market forces) without getting out of bed. They'd move a hell of a lot more if they took utes. Trust me, you guys would love them.
GM could also fix its large Rear Drive issues, by adopting the Caprice (as sold in LHD under the chev badge in the middle east and brazil)

And Ford could fix its Crown Vic problems by taking the Melb-built Falcon (though it's not built in LHD at the moment, it wouldn't take much money, not in US terms, to fix). They're big RWD cars, with either 4.0-liter six or 5.4-litre V8 motors. the star's a turbo six with a lazy 325 horse.

Agriculture's a whole different thing. We've long since done away with quotas and tariffs. Australia's agricultural operators are the world's leanest. there are no subsidies, anybody can import anything and, if our guys can stand on their own two feet, why can't yours?

If you have a close look, the way the US beef, vegetable (especially potato), poultry and pork industries have moved in the last 20 years, it's not pretty and it's not a human-oriented way to do business. Read Fast Food Nation and you'll see what i mean.

Anyway, we have two houses of parliament, and i doubt the FTA will pass the senate (the second of them). Howard (the Prime Minister) has tied himself closely to the US and, more particularly, Bush. Bush is a man many australians mistrust (americans, too, but that's another story), and this may cost Howard at the next election. I somehow don't think the FTA's future will be decided by the potential good it can do, but by the domestic points it will score...

cheers (and thanks for your patience!)
mt