Australian exporters will soon have market access to one of Latin America’s fastest growing economies with the signing of the Peru-Australia Free Trade Agreement (PAFTA). A number of key of agricultural commodities will gain duty-free entry to Peru including sugar, beef, rice, dairy, almonds, sheep meat and wine. In a statement, Prime Minister Malcolm Turnbull said the agreement is an excellent outcome, that will eliminate 99 per cent of stiff tariffs that Australian exporters currently face. “The export deal will generate economic growth and Australian jobs for decades to come,” Mr Turnbull said.
ABC News, 10 November 2017
a) Employing the conceptual framework used to explain world trade, clearly illustrate how gaining market access to one of Latin America’s fastest growing economies will benefit Australian exporting firms. (6 marks)
b) Although economists generally argue that increasing trade is good for economic welfare, there are a number of arguments put forward for why it might be a good idea to impose some form of barrier to trade. Clearly explain one of those arguments. (4 marks)