Unit 3 Topic 2: Global Economic Issues

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Free Trade Agreements: useful websites

Source: Department of Foreign Affairs and Trade

Economic effects of Free Trade Agreements

When examining FTA's, it is important to distinguish between outcomes and economic effects.

The outcomes listed on the DFAT website are the changes to trade barriers between nations as a result of the enacted FTA. Generally this is the removal of trade barriers such as tariffs, quotas etc.

The bigger question to analyse is: what have been the economic effects as a result of nations enacting the FTA?

So we can do some intertemporal analysis to determine the nature and size of trade before the FTA and after the introduction of the FTA.

Let's workshop an analysis example of through examining the FTA between Australia and Indonesia:

Australia entered an FTA with Indonesia in 2020.
Prior to the FTA (2007 - 2019), total trade between the two nations grew at an annual average of about 5%.
The dip around 2020 is likely a result of economic downturn of COVID pandemic, so let's start next analysis at 2021.
After the implementation of the FTA, total trade between the two nations grew at an annual rate of 27% (2012 - 2024).

It is important to recognise that correlation doesn't always equal causation, so it is important to deepen analysis by looking at different aspects of trade and relationships to determine the connections and economic effects.

However, in this instance, the significant change in annual growth of trade can very likely be attributed to the improved market access (for both nations) introduced by the FTA.

How could I deepen my analysis to evaluate the economic effects of the FTA?

Step 1: Review the specific industry sectors where nations have sought to improve access to markets by the removal of trade barriers (eg. beef exports to Indonesia).

Step 2: Develop your own analysis of the intertemporal changes within those industries (before and after FTA) to determine the relative effects of the FTA.

Try to find examples where there is a positive effect, as well as examples where the FTA has had a limited (or negative) economic effect.

Use your examination of the positive versus negative effects to create your 'on balance' evaluation.

Source: Marginal Revolution University

Assessment IA2: Research Report

Research report structure

Here is a video that provides a clear structure for a research report in economics.

It can be difficult to know where to start, so the outline provided helps you to:

Link your comprehension of economic theory to an economic issue in society.
Understand how to analyse the issues from the perspectives of various stakeholders.
Develop a logical and persuasive evaluation and balanced judgement.

Internal Assessment (IA2) for this topic is a REPORT.

Here is a video giving some guidance on report structure and layout, using MS Word.

Remember: 4 of the 25 marks for this IA relates to "creating a response", so spend some time getting your report up to an excellent professional standard, and grab four easy marks.

Useful data tools for your research.

Here is a video explaining how to use the data visualisation tools at the International Monetary Fund website. This website has the most comprehensive range of economic data sets available.

Go to https://www.imf.org/en/Data

Subject matter

Topic 2: Global economic issues

In Topic 2, students study three major factors affecting Australia’s trade relationships with the rest of the world. Firstly, the factors that have contributed to globalisation are explored from Australia’s viewpoint. Secondly, economic ideas and models are used to examine the impacts of different barriers to trade, and the economic tensions they create. Finally, the impacts of international trading agreements are considered.

Describe key concepts using economic terminology, including methods of trade protection, economic integration, economic union, globalisation and trade liberalisation.
Explain, analyse and evaluate the
- factors that have contributed to the growth of multi-company and multinational supply chain integration, e.g. the location of natural factor endowments; digital and other innovation; infrastructure (including logistics); and government incentives
- factors that have contributed to globalisation and current international trade patterns, including technology; multi-national corporations; regional trading blocs; and deregulation of financial capital markets and of non-government institutions, e.g. the World Trade Organization, International Monetary Fund and World Bank
Explain the methods of protection employed by nations, and construct supply and demand diagrams to demonstrate the effect of methods of trade protection, including tariffs and non-tariff barriers (e.g. subsidies, quotas and bureaucratic requirements).
Analyse and evaluate the economic arguments for and against protectionism and trade liberalisation responses from different viewpoints using economic criteria (e.g. economic efficiency, economic growth, living standards or resource allocation) to make a decision about the past, present or future regarding the relative merits of trade policy alternatives.
Explain
- bilateral, regional and multilateral trade agreements that involve Australia
- the contemporary role of ‘free trade’ agreements and their impact on Australia’s international trade, including trade creation and trade diversion.
Analyse and evaluate the economic outcomes of international trading bloc agreements (e.g. Australia–New Zealand Closer Economic Relations Trade Agreement (CER), European Union (EU), North American Free Trade Agreement (NAFTA), ASEAN–Australia–New Zealand Free Trade Agreement (AANZFTA)) on Australian economic growth, and decide on the net benefits using economic criteria, e.g. economic efficiency, economic growth, living standards or resource allocation.
Create responses that communicate economic meaning using data, information, graphs and diagrams in paragraphs and extended responses to suit the intended purpose.

Reproduced from Queensland Curriculum and Assessment Authority, Economics 2025 v1.2 General senior syllabus October 2024, page 43