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An Assignment

On
Barrier to International business

Submitted to
Mrs. Nupur Rao
Faculty XIDAS

Submitted by
Sushil Benedict Lakra
PGDM III Sem.
Xavier Institute of Development Action and Studies, (XIDAS)
Mandla Road, Tilhari, Jabalpur (M.P.)

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Barriers to trade

To support local industries some countries place barriers to trade. While perhaps helping the
local industry in the short term, there is a cost to the nation’s economy.

Some types of trade barriers:-

Tariff (customs duty) — a tax on imported goods or services. Tariffs usually make imported
goods or services more expensive than the local version.

Subsidy — a benefit to local producers and export firms, for example, money to help lower
costs, tax benefits, and exemptions.

Quota — a limit on the quantity of a good that can be imported for a specific period.

Embargo — a complete ban on the import of a product for Economic, political, religious,
security or quarantine reasons.

Hidden barriers — quality, labeling, safety, and packaging requirements can make it
difficult to sell products overseas and add to final costs.

Australian exports have increased since trade and investment were liberalized in the 1980s.
Many countries have lowered their tariffs on imported goods so our products are cheaper for
people to buy. Some countries have also lowered subsidies (payments to their producers) so
that their producers had to become more efficient to compete globally. Therefore, Australia’s
exports of skilled goods and services are now cheaper in some countries and we can buy
goods from other countries, in a quality or style we want. The world is becoming more
specialized.

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Country Profile: Australia
Area: 7,682m sq km
Population: 20.7 million
Capital city : Canberra
People : 99% of the populations are of European or Asian descent
Languages : Mainly English with some other European, indigenous and
Asian languages
Religion(s): Predominantly Christian with Buddhist, Jewish and Muslim
Currency: Australian Dollar (A$)

Major political parties : There are seven registered parties. They are the:
Australian Labor Party (ALP), Liberal Party, National Party, Green Party,
One Nation, Australian Democrats, and Family First.

Government: The Australian Constitution of 1901 established a federal


system of government. Under this system, powers are distributed between a
federal government (the Commonwealth) and the six States (three Territories
- the Australian Capital Territory, the Northern Territory, and Norfolk Island
have self-government arrangements). The Parliament is at the very heart of
the Commonwealth government. The Parliament consists of The Queen
(represented by the Governor-General) and two Houses, the Senate and the
House of Representatives. These three elements make Australia a
constitutional monarchy, a federation and a parliamentary democracy.

Prime Minister: The Hon Kevin Rudd MP (Leader Australian Labor Party)

Foreign Minister : The Hon Stephen Smith MP

Membership of international groups/organizations:

 The United Nations (UN),


 The Commonwealth,
 The World Trade Organisation (WTO),
 The Asia Pacific Economic Co-operation (APEC),
 Organisation for Economic Cooperation and Development (OECD),
 The Association of Southeast Asian Nations (ASEAN) Regional Forum
(ARF),
 United Nations Educational,
 Scientific and Cultural Organisation (UNESCO),
 Pacific Islands Forum (PIF),
 Pacific Community (SPC),

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 South Pacific Regional Environment Programme (SPREP).
Economy:

Almost two decades of continuous economic growth, a low unemployment


rate and a strong banking system which is the result of a series of structural
and policy reforms have all left Australia better placed in the face of a global
economic downturn than many other developed nations. Growth has slowed
considerably since the middle of 2008, and eagerly anticipated economic
indicators will soon tell whether Australia will be able to avoid recession in
2009.

The current crisis has led the Government to introduce a series of stimulatory
measures and the Reserve Bank to make repeated cuts in the official interest
rate, encouraging first homebuyers to take some pressure off the rental
market. The Government's economic strategy has centred on providing
financial assistance to lower-income families and individuals, designed to
take some of the burden away from the most vulnerable.

The economy however continues to benefit from demand for resource and
minerals, and it is generally accepted that China’s continued growth – albeit
slower than previously thought – holds the key to Australia’s recovery on the
other end of the current crisis. Until then, a substantial rise in
unemployment predicted for 2009, a year that, the Government has said, is
expected to be difficult.

Trade

Australia has a largely affluent society and open and innovative economy,
resulting in growing foreign investment over the past decade. Australia
continues to be a strong advocate of increased trade liberalisation in the
World Trade Organisation and plays an active role in global trade talks.
Japan remains Australia’s largest export market, followed by China, the
United States, the Republic of Korea and New Zealand. Strong political,
economic and cultural links to the UK make Australia a more significant
market for UK exports than its comparatively small population might suggest.
In 2007-08, the UK was Australia's sixth largest merchandise trading partner
and seventh largest source of merchandise imports. Today the UK remains
Australia’s top European Union trading partner.

The UK sells more to Australia than to India or China, and Australia is the
UK’s 5th largest market for goods outside the EU. Agriculture, Mining, Oil
and Gas, Information and Communication Technology, Biotechnology,
Creative and Media, Marine, Railways, Food and Drink, Recreation and
Leisure, and Aerospace are all sectors identified as offering significant
opportunities for British companies.

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In 2007-08, two-way merchandise trade between Australia and the United
Kingdom was worth approximately A$16.8 billion. The services trade was
also strong in 2007-08, around A$4.7 billion in exports and A$4.2 billion in
imports. Recreational travel on both sides remains the strongest contributing
factor to the services sector.

Global Trade

Australia’s trade policy is geared to increasing economic activity,


liberalising trade and maximising access for Australia in the international
market place. Australia is an active player in the WTO, in particular on
agriculture. However, in the absence of progress toward a new global trade
deal at the WTO, Australia is pursuing regional and bilateral free trade
agreements, which, it hopes, will deliver faster trade and economic. FTAs
have been completed with the US, Singapore, Thailand, New Zealand and
Chile, and negotiations are underway with China, Malaysia, Japan, and
ASEAN. Further bilateral FTA’s with India, Korea and Indonesia are also
under consideration.

(Source: www.fco.gov.uk )

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Trade Rules and Regulations

Trade Policy:

Having shielded its industry for most of the past decades behind tariff
protection, Australia began to reduce its tariff including in its most protected
industries such as automobiles and textiles in the 1980s. The Australian
economy has since reaped the rewards of tariff reduction through lower
prices of imported business inputs, increased productivity and improved
international competitiveness.

Import Controls

There are no special requirements for applying an import licence, nor are
there any quotas on imports. However, under the Customs (prohibited
Imports) Regulations, controls take the form of a) an absolute prohibition
meaning that import of these goods is banned in any circumstances; and b) a
restriction where imports are allowed only if written authorisation is obtained
from the relevant authorities, or if compliance with certain regulations is
met. For some commodities, import permits are required to facilitate
clearance of goods.

Items subject to control include animals and animal products; narcotics,


psychotropic and therapeutic drugs; certain chemicals and primary
commodities; firearms and certain weapons; motor vehicles; and certain
dangerous goods. Controls on these goods are maintained to meet health and
safety requirements or labelling, packaging or technical specification
requirements.

Customs Valuation and Tariff

Australia adopted the Harmonised Commodity Description and Coding


System (HS). It is a dual-column schedule providing for both general and
preferential duty rates applied to goods from developing countries.

The Australian Government has planned for the progressive reduction of


tariff protection for local industry. The tariff reduction programme has
already reduced 48% of Australian tariff to zero and 35%. About 86% of
tariff rates now range between zero and 5%, except certain automobile
products and the textile, clothing and footwear commodities. The average
applied most-favoured-nation (MFN) rate for industrial products is 4.6%,
while the applied MFN tariff for agricultural products is less than 1%.

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While there are several ways of valuing goods for customs purposes, the
method most applied is the transaction value based on the price actually paid
for the imported goods.

GST and Other Taxes

Goods and services tax (GST) was introduced in 2000 and is payable on most
goods and services imported into Australia except for some essential
commodities. GST is levied at 10% of the value of a taxable importation
which is the sum of the customs value of the goods, any customs duty
payable, delivery costs and other expenses.

Australia imposes GST, wine equalization tax and luxury car tax on locally
produced and imported goods.

Anti-dumping and Countervailing Duties

Where a consignment of goods has been imported to Australia, or is likely to


be imported, and an Australian industry producing the like goods believes
there are reasonable grounds, an applicant may apply for a dumping duty
and/or a countervailing duty notice to be published.

Australia has initiated a number of anti-dumping proceedings against certain


countries including China. Currently there are a number of mainland origin
goods subject to Australia's anti-dumping measures, including preserved
pineapples, preserved mushrooms, and certain chemicals

Customs Clearance

Importers wishing to clear their own goods should contact the Customs
Information and Support Centre for advice on Customs requirements and
operating hours. Customers should be aware of their obligations and base on
their assessments of import procedures. Penalties may be imposed for the
submission of incorrect or misleading information.

Business travelers carrying commercial goods or sample may need to obtain


permits for their goods depending on the nature of the goods, regardless of
value. Quarantine and wildlife regulations and other restrictions may also
apply to certain goods. Laptop computers and other electronic goods for
personal use may be admitted duty free provided Customs is satisfied that
these goods would be taken back on departure.

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Customs advises that purchasing goods over the Internet or mail order are
subject to customs controls. Restricted goods brought into the country require
an import permit. Goods may be imported duty and tax free if their value is
$1000 or less, with the exceptions of tobacco and alcoholic products.
However, multiple packages to the same addressee from a single consignor
arriving at the same time are liable for tax assessment.

(Source: Small Business Resources-Trade Regulations of Australia.)

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