Free trade can be defined as a situation where there are no artificial barriers to trade imposed by either governments or international organisations. Australia is actively pursuing free trade through unilateral, bilateral and multilateral agreements, which are designed to bring about the reduction of these artificial barriers, or protectionist policies. Trade liberalisation is also aided by international organisations such as the WTO, and also by regional blocs and forums such as APEC and ASEAN. Free trade is pursued by the government because of the long-term benefits to the individual, firm and economy.

Historically, Australia has been one of the most protectionist countries in the world. Governments in the past have found it necessary to protect Australian manufacturers, who for many years found it difficult to compete with the rest of the world's established manufacturers because of Australia's relatively low output and small population. However, in the early 1970's Australia began to shift away from this approach, and during

s that a reduction in protection has resulted in a significant increase in the diversity of Australia's export base, and significant growth in all exports. This is evidenced by the growth in manufactures exports, growing from 12% in 1981-82 to 23.8% in 1999-00, nearly doubling in under two decades, and in rural exports, which grew from $13 billion in 1990 to $23.6 billion in 1999-00. So it can be seen that the reduction in protection has been accompanied by a rapid growth in exports, suggesting Australian firms are becoming more competitive on the global markets.

The beneficial effects that a reduction in protection has on firms and individuals has a 'flow on' effect on the economy as a whole. Reduced individual overall spending (as all goods will be cheaper) will lead to higher rates of domestic saving, and thus more investment. And the phasing out of protection will have a beneficial effect on Australia's trade performance and the Current Account Deficit (CAD.) This is because lower protection and greater competitiveness and efficiency will result in greater demand for exports. Recent reports have suggested that Australia's failure to reduce tariffs has contributed greatly to the current CAD problem: "the results suggest that around half of Australia's higher than average CAD between 1970 and 1990 was due to our failure to cut tariffs in line with other OECD countries...the reduction of tariffs by 8% by 2000 could reduce Australia's CAD by around 1.9% annually" (EPAC).

The World Trade Organisation, one of the worlds most powerful global economic institutions, was formed in 1995 with the intention of implementing and advancing global trade liberalisations and trade disputes. Set up as a forum for discussion and agreement, and as a policing body, the WTO had 134 members in 2000, with another 32, including Russia and china waiting to join. The WTO is the first organisation with the power to enforce trade agreements around the world, and seeks to establish a trading environment of open and non-discriminatory markets which promote fair competition. However, recent efforts to establish a new round of talks in failed in Seattle in November 1999. The reason talks failed was because of the difference between the major advanced nations and the developing world. Developing nations are losing faith with the free trade agenda, arguing that it is benefiting the rich nations and not the poorer. They were promised that the 1994 Uruguay round agreement woul!

the short run, and so Australia is pushing for further afield agreements. Success in this area has come from the new presidential administration in the United States, with interest in a bilateral agreement that could expand to become a larger, multilateral Pacific trade agreement, such as the proposed P5, a trade bloc of the most influential trading nations from the pacific region.

(Minister for Trade, the Hon Mark Vaile MP, Melbourne Dec 1999)

the late 1980's began a program to phase out almost all tariffs. This was begun for many reasons, but primarily because of the predicted benefits. The lack of protection (provided i

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