The Australian System of Tariff Preferences: ASEAN Experience

Abstract

This paper assesses the overall effectiveness of Australia’s preferential scheme in improving the market access of ASEAN imports and quantifies the effects of such preferences on Australia-ASEAN trade. A market model for Australia's imports is developed with its postulates drawn from constrained equilibrium principles. The results indicate the efficacy of the preferences beginning in 1974 when the scheme was revised, but the trade gains derived by the ASEAN countries are marginal. Moreover, they demonstrate that increased trade between Australia and ASEAN can occur without adversely affecting Australia's trade with the nonpreferred countries. The findings further support the view that realization of the potential value of preferences depends on the economic climate in the preference-granting country and the ability of the preference-receiving country to respond to the preference stimulus.