Australia’s share in international trade has always been relatively small, currently standing at about 1.2% (WTO, 2006). Our major trading partner has become over the years the European Union (EU), which now accounts for 17% of our total merchandise trade and 21% of traded services (Bramble, 2008). The European market is vitally important to the Australian economy as it is our major trading partner. However the view from Europe can be a very different one, with this essay discussing the implications that despite many years of economic reform in Australia since the 1980’s, the country still remains a farm and a quarry in its economic relations with the EU. This will be discussed in detail by providing an outline of the current economic and trade relationship with the EU, a history of Economic policy changes and impacts this has had on world trade. The impact these changes have had on our trade relationship with the EU comparing current trends with that of 25 years ago and the differing views of Australia and the EU of each other will also be discussed. Firstly, a history of the economic climate in Australia during the early 1980’s will detail the trading relationship between the EU and Australia leading up to a period of widespread economic reform.
The Australian Economic Climate and Trade with Europe of The 1980’s
The economic climate in mid to late 1970’s was an unhappy period for macroeconomics, with gross mismanagement of monetary policy, comparable only to that found in the 1930’s (Macfarlane, I.J. 1998: 6). Severe inflation was the order of the day, with rates rising as high as 17½% in 1973 (Stevens, 2003), which was initially tolerated by the governments at the time as it reduced unemployment in the short term. However by the end ...