Why and how does Australia pursue policies to promote free trade? What are the benefits to Australia from free trade? What role does the WTO play in liberalising trade?
             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 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 it is global) would be beneficial to firms, individuals, and the economy.
             Australia's transition from a highly protected economy to an economy with relatively few barriers to trade occurred over a period of just a quarter of a century. It began with the Whitlam governments famous (and controversial) 25% across the board tariff cut. The Hawke government was the next government to tackle the idea of reduced protectionism, announcing in 1988 that a comprehensive program of tariff reductions were part of its microeconomic reform program. In 1991 the Industry Sta...