Chapter 3: International Trade and FTA Flashcards Preview

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Flashcards in Chapter 3: International Trade and FTA Deck (19)
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1
Q

International Trade

A

The exchange of capital, goods and services across national borders

  • Beneficial to consumers -> wider consumer choice (g/s not available in their country)
2
Q

Free trade agreement

A
  • An international treaty that facilitates stronger trade and commercial ties, and increase economic integration between participating countries
3
Q

Incentives for International trade

A
  • Australia government provides incentives and tax offset for Australian businesses participating in export-oriented activities
4
Q

Incentives:

EMDG

A
  • Export Market Development Grant
  • Provides organisation substantial cash rebates for overseas marketing expenditure
  • Reimbursement of 50% on eligible expenditure
  • Minimum spend of $15k on overseas marketing
  • Australian with maximum income of $50m
  • Incurred to a maximum of $150k
5
Q

Incentives:

TRADEX

A
  • Gains an upfront exemption from Custom Duty and GST for imports intended for exports
  • Imports can be exported as it is or modified before exporting
  • An alternative to Custom Drawback Scheme where and upfront payment is required before recovery of the tax
  • TRADEX provides significant cash flow benefit
  • However, imports should be exported within 12 months
6
Q

Incentives:

EFIC

A
  • Export Finance and Insurance Corporation
  • Government export credit agency
  • Aus gov provide exporters with finance and insurance support to breakdown financial barriers when expanding overseas
  • Work alongside with exporters and their banks to help provide loan, bonds, guarantees and insurance to meet exporter’s needs
  • Also helps successful businesses to win, finance and protect their exports
7
Q

Incentives:

Tax Incentives for R&D

A
  • Government provide tax incentives for businesses that are involve research and development
  • Companies will receive tax offset for engagement in R&D activities including activities overseas.
8
Q

Benefits of FTA:

Benefits to consumers

A
  • Wider consumer choice

- Promote competition that will encourage producers to reduce price, improve quality and increase innovation

9
Q

Benefits of FTA:

Foreign exchange gains

A
  • Receive hard currency through exports
  • Use the currency to finance imports
  • Easier finance transaction
10
Q

Challenges of FTA:

Increase in domestic economic instability

A
  • Due to FTA, economies are more dependent on one another

- Business, employees and consumers are vulnerable to economic downturn of not just their own but others as well.

11
Q

Challenges of FTA:

Infant industries

A
  • Difficult to achieve e.o.s without government protection

- Cannot compete against MNCs as they cannot reduce price like MNCs do

12
Q

Key benefits of AANZFTA:

Extensive tax reduction

A
  • Eliminate 96% tariff of Australian exports to ASEAN countries by 2020
  • Producers: Cheaper exports -> Reduce price of g/s -> increase DD and profit
  • Consumers: Cheaper and wider consumer choice -> improve SoL
  • Tariff meat phased to 0
13
Q

Key benefits of AANZFTA:

Regional Rules of Origin

A
  • The criteria needed to determine national source of product
  • New opportunities for Australia exporters to tap into international supply chain in the FTA
  • Clear how businesses can label their products
14
Q

Key benefits of AANZFTA:

Promote certainty for Australian suppliers and investors

A
  • Legal protection for investment in ASEAN

- Set standard for treatment of investors and suppliers, increasing their confidence

15
Q

Key benefits of AANZFTA:

Provides a platform for ongoing economic engagement

A
  • International cooperation for build in agendas, economic cooperation and business outreach activities
16
Q

Key benefits of ANZCERTA:

All quantitative import and export restriction are prohibited

A
  • Businesses can reduce cost of production and produce more to increase profit
  • Consumers can have more choices from NZ
17
Q

Key benefits of ANZCERTA:

Minimise market distortion

A
  • Discourage government providing protection like subsidies for fair competition (Subsidies allows biz to reduce CoP -> reduce P -> unfair competition)
  • Fair competition is beneficial for consumers as it will result in better price, quality and innovation
18
Q

Key benefits of ANZCERTA:

Harmonisation of Trans-Tasman food standard

A
  • Recognition of food standard

- Reduce compliance cost and fewer regulatory barriers

19
Q

Key benefits of ANZCERTA:

Mutual recognition…

A
  • Mutual recognition of goods and services removes technical barriers to trade and impediments to movement of skilled personnel
  • No need to complete harmonisation of standard and professional qualification