Lowering+Tarrifs+(Trade+Liberalisation)+-+Jayden

=__Lowering Tariffs / Trade Liberalisation__ =

Aim of the Microeconomic Reform
The general aim of a Microeconomic reform is to:
 * Increase Productivity and expand Productive Capacity of the economy.
 * Lower Production Costs.
 * Lower Production Costs means that firms can pass on savings to consumers, especially is the market is competitive (Cost Inflation ­Decreases).
 * Expanding Aggregate Supply facilitates growth in Aggregate Demand without causing inflation.

Lowering Tariffs

 * Tariffs are taxes on imports, used to dissuade consumers from purchasing overseas products, thus promoting Australian made Goods and Services.
 * Lowering Tariffs lowers the cost of production as importing components from overseas countries becomes cheaper for Australian manufacturers.
 * Lowering Tariffs is a small step towards Trade Liberalisation

Trade Liberalisation

 * Trade Liberalisation means that nations can engage in international trade without facing 'protection' or 'trade barriers'.
 * It is designed to force local businesses to restructure in an effort to combat higher levels of competition and take advantage of any new opportunities by tapping into export markets.
 * It mainly occurs in the area of quota's, tariffs and/or subsidies, where quota's involve a volume on the limit of imports, tariffs a tax on imports, and subsidies some form of financial assistance.
 * The aim of Trade Liberalisation is to get rid of the 'protection' which is applied to protect local producers from competition in an effort to promote local output, employment and income.



Benefits and Information
Higher levels of protection reduce competition for local import competing producers and result in less pressure to minimize costs and prices. Over time, foreign producers tend to become relatively more efficient as they are exposed to greater competitive pressures. They are then able to reduce prices and gain a foothold in the Australian Market. Local producers, again under threat, once more seek the protection of government policies and ask for an increase in tariffs to 'protect Australian jobs'. This will help reduce inflation as the prices of goods and services are kept at a stable level, with increased competition causing producers to have to minimize their prices. Increased productivity also helps curb inflationary pressures, as Production Costs are decreased, thus decreasing Cost Inflation, due to the producer saving money because the workers are producing their goods more efficiently and productively.

A report released by the Minister for Trade in July 2009 highlighted that Trade Liberalisation added 2.5 - 3.5 % to the Australian Economy over the past two decades, and benefited the average Australian working family by up to $3,900 per annum. Increased tariffs will only intensify the global economic slowdown, with economic modelling suggesting that a 1% point increase in average tariffs would result in a global GDP contraction of more than $110 Billion. It helps boost productivity at the workplace level as the producing companies will seek lower production costs, and may offer incentives for workers to be more productive as they may be payed per item produced, and this along with the Lowering of Tariffs helps the average family as prices will be more competitive, therefore leaving them with slightly more money to spend in other sectors of the economy.

The video below briefly explains Trade Liberalisation media type="youtube" key="vIibveHmaZo?rel=0" height="510" width="640"