Prospects and Challenges of Free Trade Agreements: Unlocking Business Opportunities in Gulf Cooperation Council (GCC) Markets

152 Pages·2015·1.208 MB·English

by  Doren Chadee, Banjo Roxas, Tim Rogmans (auth.)

Prospects and Challenges of Free Trade Agreements
DOI: 10.1057/9781137479884.0001
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DOI: 10.1057/9781137479884.0001
Prospects and Challenges
of Free Trade Agreements:
Unlocking Business
Opportunities in Gulf
Cooperation Council
(GCC) Markets
Doren Chadee
Deakin University, Australia
Banjo Roxas
Deakin University, Australia
and
Tim Rogmans
Zayed University, UAE
DOI: 10.1057/9781137479884.0001
© Doren Chadee, Banjo Roxas and Tim Rogmans 2015
Softcover reprint of the hardcover 1st edition 2015 978-1-137-47986-0
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No portion of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
Saffron House, 6–10 Kirby Street, London EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as the authors of this work
in accordance with the Copyright, Designs and Patents Act 1988.
First published 2015 by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
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Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN: 978–1–137–47988–4 PDF
ISBN: 978-1-349-50257-8
A catalogue record for this book is available from the British Library.
A catalog record for this book is available from the Library of Congress.
www.palgrave.com/pivot
doi: 10.1057/9781137479884
Contents
List of Figures viii
List of Tables ix
Preface xi
Acknowledgements xv
Countries of the Gulf Cooperation Council xvii
1 Background and Context of the Study 1
1.1 Background of study 2
1.2 Context of the study 6
1.3 Objectives and structure of the study 7
2 The Political Economy of Free Trade 9
2.1 The economics of free trade 10
2.2 Instruments of trade policy 13
2.3 Assessing the benefits of free trade: an
economic framework 17
2.4 Effects of tariffs and quotas 19
2.4.1 Effects of an import tariff 20
2.4.2 Effects of an import quota 22
2.5 Recent trends in tariff barriers 24
2.6 Why do governments intervene in
trade and investment? 28
2.7 An institutional perspective of FTAS 29
2.7.1 Institutions and FTAs 30
2.8 Summary and conclusion 32
3 GCC Market Scope and Competitiveness 34
3.1 GCC market profile 35
DOI: 10.1057/9781137479884.0001 v
vi Contents
3.2 International competitiveness of GCC states 40
3.3 Most common problems encountered when doing
business in GCC states 44
3.4 Ease of doing business in GCC states: institutional
factors 45
3.5 Ease of doing business in GCC states: cultural
considerations 49
3.6 Summary 53
4 GCC–Australian Trade and Investment Trends and
Patterns 55
4.1 Australian–GCC merchandise trade 56
4.2 Australian merchandise exports to GCC 57
4.3 Australian merchandise imports from GCC 58
4.4 Composition of Australian merchandise trade
with GCC 59
4.5 Trade in services 61
4.6 Australian–GCC investment patterns 65
4.7 Summary 66
5 Challenges and Opportunities for Australian
Businesses in GCC 68
5.1 Identifying trade barriers: a framework 69
5.2 The business survey 70
5.3 Sample characteristics 71
5.3.1 Ownership and location 73
5.3.2 International business scope of sample firms 74
5.3.3 Australian business activities in the GCC
region 75
5.3.4 Revenues derived from GCC markets 76
5.4 M ain barriers faced by Australian businesses in
GCC states 77
5.5 Awareness and support for the proposed
Australia–GCC FTA 80
5.6 Assessing the potential impacts of an
Australia–GCC FTA 82
5.7 Organisational capability and preparedness to take
advantage of FTA 83
5.8 Australian business expansion and growth under FTA 85
DOI: 10.1057/9781137479884.0001
Contents vii
5.8.1 Proclivity to expand business in GCC
following an FTA 85
5.8.2 Growth in export revenues and employment 88
5.9 Summary 91
6 Australia–GCC FTA: International Business Prospects
and Limitations 93
6.1 Challenges facing the GCC 94
6.2 FTA as an internationalisation Strategy 95
6.3 Main challenges facing Australian businesses
in GCC 97
6.4 Business expansion, revenue and employment
effects 100
6.5 Emerging business opportunities in GCC: growth
sectors 102
6.5.1 Travel and tourism 103
6.5.2 Industry, trade and logistics 104
6.5.3 Education and health 105
6.5.4 Construction and infrastructure 106
6.6 Unlocking business opportunities in growth sectors 107
6.6.1 Managerial recommendations 107
6.6.2 Policy recommendations 109
6.7 Doing business in GCC – some
practical advice 110
6.8 The importance of developing strong
institutional intelligence 112
6.9 Contributions of the study 118
6.10 Summary 120
Appendix: Additional Resources on Australia’s FTAs 122
Bibliography 124
Index 129
DOI: 10.1057/9781137479884.0001
List of Figures
2.1 Production possibility frontiers 11
2.2 W elfare effects of a price change on consumers
and producers 19
2.3 Effects of import tariffs 21
2.4 Effects of an import quota 23
2.5 Average import tariff rates in 2012: Australia
and GCC 25
3.1 Main pillars of international competitiveness 41
3.2 Main dimensions of cultural distance,
Australia–GCC 51
4.1 Two-way trade between Australia and GCC,
2000–2012 57
4.2 Australia–GCC two-way trade by country,
2000–2012 57
5.1 Firm size: number of employees and annual
revenues 72
5.2 International business scope and export revenue 75
5.3 C ountry-specific barriers faced by Australian
businesses in GCC countries 81
6.1 A framework for developing institutional
intelligence 113
viii DOI: 10.1057/9781137479884.0002
List of Tables
1.1 Australia’s top ten two-way trading partners 2011 5
2.1 Comparative advantage and the gains from trade 11
2.2 Trade policy instruments 13
3.1 Salient features of the population in GCC 36
3.2 Selected economic indicators of GCC economies 38
3.3 Energy reserves in GCC 40
3.4 I nternational competitiveness of GCC countries,
2013–2014 42
3.5 Main factors affecting the competitiveness of the
GCC states 43
3.6 Five most common problems encountered by
businesses in GCC countries 45
3.7 Ease of doing business in GCC countries and
Australia, 2014 46
4.1 Australian merchandise exports to GCC
countries, 2004–2012 58
4.2 Australian merchandise imports from GCC
countries, 2004–2012 59
4.3 Composition of trade: Top 5 Australia-GCC
trade categories 60
4.4 A ustralian-GCC services trade, 2004–2012 62
4.5 GCC students enrolled in Australian educational
institutions, 2004–2012 63
4.6 Value of Australian education exports to GCC
countries 64
4.7 A ustralian investments in GCC countries,
2004–2012 65
5.1 Industry composition of sample 71
DOI: 10.1057/9781137479884.0003 ix