Government Policy and the Liberalization of Australia’s Car Industry: A Historical Analysis

Abstract

Australia is regarded as a good advocate of progressive trade liberalization. With the notable exception of textiles, clothing and footwear (TCF), the automotive, and the sugar industries, Australia has reduced its average tariff rate to the lowest levels in the world. Its commitment to increased trade openness is also reflected in the recent review into its trade policy, which expressly supports a strong, rules-based, multilateral trading system administered through the WTO. However, with the suspension of the Doha Round, Australia’s trade policies have tended to be more protective in some sectors, which are demonstrated by increasing amount of budgetary assistance even though trade barriers are dramatically reduced. This paper examines the key developments in the Australian car industry policies over the years, in the context of Australia’s WTO commitments. The discussion is organized in four sections. The first section gives a brief overview of Australian car industry and its relationship to government policy. The three remaining sections examine different periods in Australia’s automotive policy as it relates to Australia’s WTO commitments. It will be argued that, while Australia has made considerable progress towards opening up its car industry to foreign competition, new forms of protection have emerged which pose the risk of undermining some of the benefits of liberalization.