What are the cultural, economic, and geopolitical advantages and disadvantages of trading in Australia?

3 Answers

kipling2448's profile pic

kipling2448 | (Level 3) Educator Emeritus

Posted on

Trade is important to Australia for multiple reasons. As with many other countries, Australia depends upon international trade to generate growth across various sectors of its economy, especially in mining. Australia is a major player in the realm of mining with very large deposits of minerals such as iron ore, gold, lead, zinc, and nickel. Trade in these substances accounts for a little more than half of the country's total exports. Australian government data shows that the value of mineral exports to the nation's economy is over $120 billion. These exports could not exist without solid trade relations with many countries, including China, Japan, the United States, and South Korea. It is the first of those trade partners listed, China, that leads us to the geopolitical advantages to Australia of trade.

China is a major market for Australia's iron ore and gold exports. It is in the geopolitical realm, however, that these exports are most important. A look at a map of the Asia-Pacific region reveals the complexities and dangers inherent in navigating, both figuratively and literally, the waters of the neighborhood in which Australia sits. China is a growing military and economic power with an avowed goal of controlling all the South China Sea as well as strategically important island chains near Japan and the Korean Peninsula. That ambition is perceived as a threat by every other nation in the region, including Vietnam, Japan, Singapore, Indonesia, the Philippines, and more. Each of these countries has claims of legal possession of various islands and island chains over which China is actively seeking total control. In addition to the natural resources believed present in these disputed waters, the world's busiest maritime channel runs right through the area, more specifically, the Strait of Malacca near Indonesia. By possessing what China wants and needs, Australia can leverage its exports for geopolitical purposes.

Culturally, Australia gains significantly through its interaction with its trade partners, especially with the 10-nation Association of Southeast Asian Nations (ASEAN). An English-speaking Caucasian enclave (along with New Zealand) within Asia, Australia is a sort of odd man out. By strengthening its economic ties with the countries of ASEAN, it can better assimilate into the neighborhood. The movement of goods and people among the ASEAN (which Australia is negotiating to possibly join) nations would allow Australia to facilitate the development of stronger cultural ties that, in turn, would benefit Australia geopolitically. For these reasons, Australia is also very supportive of the Trans-Pacific Partnership arrangement. This was to include the United States, until the newly-elected president of the United States withdrew American participation in the negotiations.

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The benefits of trade for Australia are largely economic and geopolitical.  There are a few cultural advantages, but they are less important (at least arguably) than the other types of benefits.

Culturally, trade can bring greater diversity to Australia.  This is because trade encourages more contacts with people of the Asian nations surrounding Australia.  Trade, for example, can encourage more Japanese and Chinese people to visit Australia.  It can cause some Asians to need to live in Australia at least temporarily for business purposes.  This can add to Australia’s culture to some degree.

Economically, the importance of trade is clear.  Australia has large mineral deposits and it has an advanced and diversified economy.  This means that it can provide many of the sorts of things that China (as well as other countries) needs.  If Australia can supply things to the Chinese market, it is likely to be able to sell much more than it ever would be able to use domestically.  Trade, then, helps Australia’s economy by opening up much larger foreign markets to Australian goods and services.

Geopolitically, we can argue that trade matters as well.  If Australia has strong trading ties to countries like China and India, it may be able to have some influence on those countries.  Since China, in particular, is seen by many as a rising power, this can be a valuable thing for Australia.

Thus, Australia can benefit from trade in a variety of ways.

pholland14's profile pic

pholland14 | (Level 1) Associate Educator

Posted on

The advantages for trade in Australia are clear.  Australia can benefit from trade with China and India.  Australia can export beef to China with lower shipping costs than producers in the Americas.  Culturally, Australia can also rely on its tourism industry.  Australia can encourage people to come to the Great Barrier Reef and the Outback as well as the Opera House in Sydney.  Australia can benefit by importing cheaper Chinese goods but must be careful that it does not create a trade deficit which may hurt its own industrial sector.  Australia's key advantage here is that it does not have to pay higher fuel costs in order to get goods from Asia and Japan.  

There are some disadvantages to trade in Australia.  Too many tourists can leave too much pollution in fragile ecosystems.  Also, foreigners competing with Australians for jobs can lead to domestic tension.  Australia is considered a place with its own unique culture that travelers love to experience—too many travelers and imports, and the island could potentially lose its charm.  Nations in western Europe and the Americas must also face the problem of increased shipping costs in order to get goods to Australia.