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MBA720:

Global and Regional Economic Development

Final Assessment

THE CONTEXT

The possibility of a free trade agreement (FTA) between Australia and the United States first appeared on the political agenda in late 2002. At this time, there did not appear to be a great deal of optimism from the Australian side that an agreement of any substance would be reached in the foreseeable future. In the aftermath of the Iraq War (in which Australia was a key ally of the United States), the prospects of an agreement now appear much brighter.

Australian Prime Minister John Howard and US President George W. Bush

Image source: http://edition.cnn.com/2003/US/05/03/bush.howard.ap/index.html

In May 2003, Mr Howard became the latest in an exclusive group of world leaders to be invited to Mr Bush’s ranch, following in the footsteps of other leaders of the ‘coalition of the willing’, British Prime Minister Tony Blair and Spanish Prime Minister Jose Maria Aznar. At a press conference called by the US President, Mr Bush thanked Australia for its support in the Iraq War and praised the Prime Minister for being a ‘man of courage’. The President then went on to tell the media that he was “firmly committed to an FTA with Australia”, and that he wanted a deal by the end of the year for presentation to the US Congress in 2004. “I believe we can get it done” said Bush, “I think it would be an important step in our relationship”. (See Bush praises Australian PM’s ‘courage’, BBC News, 03/05/05.)

Back in Australia, the response to the suggestion that there be an FTA between Australia and the US has been met with some scepticism. (Listen, for example, to the interviews conducted on Talks to open on US-Aust free trade deal, Business Breakfast, ABC Radio, 18/03/03). You will need RealPlayer on your computer to access this file, or you can simply read the transcript of the programme.

At the same time as the Prime Minister was visiting the President, the Labor Opposition Trade Spokesman, Craig Emerson, made clear his views on the proposed FTA in an interview on ABC Radio’s AM programme (05/05/03). Listen to the interview Labor opposed to US-Australia free trade proposal (on RealPlayer), or read the transcript.

Craig Emerson, Opposition Trade Spokesman

Image source: www.alp.org.au/kn/ kntf_members.html

YOUR TASK

As a Board member of an Australian company, you have just received the agenda for the next meeting and the proposed Australian-US FTA is the lead item. As the only trained economist on the Board, you know it is inevitable that your counsel will be sought by the other members. With your professional pride at stake, you decide to prepare a discussion paper to circulate in advance of the meeting that canvasses all the main issues. The brief you set yourself, very simply, is to evaluate, critically, the likely impact on business conditions (and the business conditions that face your company in particular) should Australia sign a free trade agreement with the United States.

GUIDE TO THE ASSESSMENT TASK

To help guide your thinking, you have discussed the matter with colleagues and, among other things, they suggest you contemplate the following:

· From a theoretical point of view, consider the advantages and disadvantages that an FTA offers

· Consider the likely direct impact of the proposed FTA on your company/industry

· Consider the likely impact on the Australian economy more broadly (in the immediate future and over the long term). How will this affect your company/industry?

· To convince the Board of your credentials it is vitally important that the relevant economic theory be integrated with your discussion!

IMPORTANT INFORMATION REGARDING THE PREPARATION OF YOUR WORK

1) In completing this task, be sure to draw on the concepts and analytical tools you have learnt about during MBA720, making direct references to the subject materials (i.e. the prescribed text, courseware, and other resourecs). Students who fail to comply with this directive will not receive a passing grade.

2) You must upload a written response of 2000 words (+/- 10%, excluding references) in 24 hours time via the link in the MBA720 Assignment List. Take a look at this link now so you know what is required of you.

3) The piece of writing you submit should be referenced in the normal way, using the U21G Style Guide. Students who fail to comply with this directive will not receive a passing grade.

4) This is a broad question that invites a variety of ‘equally correct’ answers.

5) High marks will be awarded for good, critical analysis, rather than content cut and pasted from web-sites and other electronic sources.

6) The expectation is that you will not have the time to submit an answer of the quality of a term time assignment, but it should resemble an answer of that quality.