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The economic impact of the Australia-United States free trade agreement

Author

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  • Shiro Armstrong

    (East Asia Bureau of Economic Research)

Abstract

The Australia–United States free trade agreement (AUSFTA) came into effect in 2005. It was the second preferential trade agreement that Australia signed, after its agreement with Singapore, and marked a departure from the primacy of Australia’s previous trade policy of unilateral and multilateral trade liberalisation towards preferential liberalisation. This paper assesses the economic effects of AUSFTA by applying the Productivity Commission’s gravity model of trade from its Bilateral and Regional Trade Agreements review. The evidence reveals AUSFTA resulted in a fall in Australian and US trade with the rest of the world — that the agreement led to trade diversion. Estimates also show that AUSFTA is associated with a reduction in trade between Australia and the United States.

Suggested Citation

  • Shiro Armstrong, 2015. "The economic impact of the Australia-United States free trade agreement," EABER Working Papers 24667, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:wpaper:24667
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    File URL: http://www.eaber.org/node/24667
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    Cited by:

    1. Leonardo Raffo López* & Edwin A. Hernández García** & Víctor A. Díaz España***, 2018. "The Pacific Alliance and the potential effects of a Trans-Pacific Economic Cooperation Agreement without the United States," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 10(1), pages 89-110, April.
    2. Leonardo Raffo López & Edwin A. Hernández García & Víctor A. Díaz España, 2018. "La Alianza del Pacífico y los efectos potenciales del Acuerdo Transpacífico de Cooperación Económica sin Estados Unidos," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 10(1), pages 65-87, February.
    3. Heid, Benedikt & Larch, Mario, 2016. "Gravity with unemployment," Journal of International Economics, Elsevier, vol. 101(C), pages 70-85.
    4. Timsina, Krishna P. & Culas, Richard J., 2020. "Impacts of Australia’s free trade agreements on trade in agricultural products: an aggregative and disaggregative analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), July.
    5. Krishna P. Timsina & Richard J. Culas, 2020. "Impacts of Australia’s free trade agreements on trade in agricultural products: an aggregative and disaggregative analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), pages 889-919, July.

    More about this item

    Keywords

    Trade Liberalisation; AUSFTA; preferential trade agreements;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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