Closer Economic Relations Trade Agreement – Definition

Cite this article as:"Closer Economic Relations Trade Agreement – Definition," in The Business Professor, updated January 26, 2020, last accessed October 25, 2020,


Closer Economic Relations Trade Agreement Definition

The Closer Economic Relations Trade Agreement is an agreement signed between the governments of Australia and New Zealand in 1983. This trade agreement is a comprehensive agreement that saw the establishment of a free trade zone between the two countries.

Also, known as Closer Economic Relations (CER), the Trade Agreement was a trade treaty on the trade of goods between the countries.

Australia–New Zealand Closer Economic Relations Trade Agreement became effective in January 1983 but the treaty was not signed until March 28, 1983.

A Little More on What is the Closer Trade Relations Trade Agreement 

Before CER was signed as a trade treaty, the New Zealand Australia Free Trade Agreement (NAFTA) existed. The trade agreement was signed in 1965 but became effective on January 1, 1966. Despite the provision of NAFTA, it was considered to be too bureaucratic and cumbersome which brought about the introduction of CER. CER accelerated the establishment of free trade of goods between these two counties and also eliminated tariffs and trade restrictions.

The Deputy Prime Minister of Australia and Minister for Trade, Lionel Bowen and Laurie Francis, the New Zealand High Commissioner to Australia signed the Closer Economic Relations (CER) in 1983. The trade agreement created a free trade zone between these countries, it also regulated tariffs and trade transactions.

There are certain results that were achieved by the Closer Trade relations (CER) after its establishment. Some of the provisions of this trade treaty include;

  • The legality of the two countries exchanging goods. This means goods can be legally sold by exporters and importers in both countries.
  • Professionals and experts who practice in either of the countries can also practice in another.
  • Registered service providers are also allowed to provide services in any of the countries.

References for Closer Trade Relations Trade Agreement › For Australians › For Exporters › Free Trade Agreements

Academic Research for Closer Trade Relations Trade Agreement 

  • Trade liberalisation, structural adjustment and intra-industry trade: a note, Hamilton, C., & Kniest, P. (1991). Weltwirtschaftliches Archiv, 127(2), 356-367. This paper explores the relationship between the intra-industry trade (IIT) levels and trade liberalization. It also analyzes the relations between trade liberalization and IIT & structural adjustment levels. The authors use a new methodology and stress on the effect of changes in protection on (1) IIT changes and (2) distinctions in structural adjustment in low-IIT and high-IIT sectors over time. They discuss the results and provide suggestions accordingly.
  • China and ASEAN: renavigating relations for a 21st-century Asia, Ba, A. D. (2003). Asian Survey, 43(4), 622-647. In East Asia, there is an exemplary relationship evolving between the ASAN (Association of Southeast Asian Nations) and the People’s Republic of China. Despite the significant differences, there is a remarkable improvement in this relationship over the last decade, particularly comparing to the substantial suspicion that defined this relation once. In this evolution, there is a great role played by the ‘changing United States priorities’ in Asia.
  • The European Union as a conflicted trade power, Meunier, S., & Nicolaïdis, K. (2006). Journal of European Public Policy, 13(6), 906-925. The European Union is forming the strongest trading bloc throughout the world. The credit goes to its 40 years experience of negotiating global trade contracts. To get changes in the domestic field of its trading partners, the EU accesses market as a bargaining chip from labour standards to policies of development and in the international field, from international governance to foreign policy. This paper examines the ambitions of the EU and underpinnings of its power through trade and across inter-regional, bilateral and international settings. The authors analyze the main dilemma linked to trade power. They argue that the accommodation strategies have to be refined if the European Union transforms its structural power successfully into legitimate and effective influence.
  • Why do countries seek regional trade agreements?, Whalley, J. (1998). In The regionalization of the world economy(pp. 63-90). University of Chicago Press. When countries try to negotiate RTAs (Regional Trade Agreements), there arise many considerations. Some take RTAs as providing underpinnings to planned alliances. Smaller countries take them with larger partners to get more security to access the markets of the larger country as is the case with Canada and the United States Free Trade Agreement is commonly known as CUSTA. Some countries use RTAs to help lock in national strategy reform and make it harder to reverse subsequently, e.g. Mexico in NAFTA (North American Free Trade Agreement. Thus, regional trade agreements differ from country to country because all countries have different goals.
  • Free trade agreements versus customs unions, Krueger, A. O. (1997). Journal of Development Economics, 54(1), 169-187. This paper makes a comparison between the Customs Union and Free Trade Agreements. Before the advent of NAFTA (North American Free Trade Agreement), preferential trading arrangements started being analyzed by supposing a CU (Customs Union) with an external tariff and there is a nominal analysis found on the differences between FTAs (Free Trade Agreements) and CU. This article highlights some of these differences and reveals that always, a CU is Pareto-Superior to Free Trade Agreements on welfare grounds. It is expected that the FTAs political economy will cause more opposition to more multilateral trade liberalization as compared to CUs.
  • Returns to regionalism: An analysis of nontraditional gains from regional trade agreements, Fernandez, R., & Portes, J. (1998). The World Bank Economic Review, 12(2), 197-220. There has been a renewed interest in RTAs (Regional Trade Agreements) in the last few years with several academics and policymakers who suppose that they provide more traditional benefits from trade. This paper examines many possible gains that RTAs (Regional Trade Agreements) can confer on the partners, i.e. insurance, credibility, bargaining power, coordination and signalling. It determines the necessary conditions for every available channel to work, provides stylized examples of certain policies where the gains may be applicable, evaluates cases in which the explanation may be relevant and brings their overall plausibility under discussion. Finally, it compares the European Agreements and the North American FTAs.
  • The long and short of the Canada-US free trade agreement, Trefler, D. (2004). American Economic Review, 94(4), 870-895. The Free Trade Agreement (FTA) between Canada and the United States shows the impacts of a reciprocal trade agreement on the Canadian industrial economy. In Canada, for the industrial concerns which experienced the deepest tariff cuts, low-productivity plants contraction decreased employment by 12% while increasing industry-level productivity of labour by 15%. Plant-level productivity of labour soared by 14%. The results show a conflict between the ones bearing the short-term adjustment costs (struggling plants and displacing employees) and the ones garnering the long-term benefits (efficient plants and consumers).
  • Free to trade: Democracies, autocracies, and international trade, Mansfield, E. D., Milner, H. V., & Rosendorff, B. P. (2000). American Political Science Review, 94(2), 305-321. Comparatively, little research emphasizes whether the political institutions of countries influence their global trade relations. This paper examines the relationship between trade policy and regime type and this way, addresses this problem. In a formal commercial policy model, the authors provide evidence that in democratic states, the legislature’s ratification responsibility leads democracy pairs to establish trade barriers at a lower scale as compared to mixed country-pairs (combining democracy and autocracy). The authors analyze the impacts of regime type on trade from the 1960-1990 period. The results support the argument: democratic pairs create open trade relations much more than mixed pairs.
  • Do free trade agreements actually increase members’ international trade?, Baier, S. L., & Bergstrand, J. H. (2007). Journal of international Economics, 71(1), 72-95. For more than forty years, the researchers have used the gravity equation to empirically make cross-country analysis of global trade flows and particularly, the impacts of FTAs on trade flows. However, it is vulnerable to similar econometric critiques as before cross-country researches of United States tariff barriers, multilateral imports of the US and nontariff barriers. Trade policy is not considered as an exogenous variable. The authors econometrically address the endogeneity of Free Trade Agreements. The findings are that the FTAs have quintupled impacts on trade flows. An FTA, on average, doubles bilateral trade of 2 members after ten years.
  • European Union trade policy: the Canada–EU closer economic relations and trade agreement (CETA) towards a new generation of FTAs?, Woolcock, S. (2011). This paper provides details of the EU trade policy and the economic relations between Canada and the European Union. It has been named as CETA, i.e. Canada-EU Trade Agreement). It is basically a novel trade agreement between the European Union and Canada. It reduces tariffs and helps to make the exports of goods and services easier. It is beneficial for the customers and the businesses for Canada and the EU. It was enforced on 21st Sep 2017. It is considered as a move towards a new generation of Free Trade Agreements (FTAs).
  • Why democracies cooperate more: Electoral control and international trade agreements, Mansfield, E. D., Milner, H. V., & Rosendorff, B. P. (2002). International Organization, 56(3), 477-513. In the past 50 years, barriers to global trade have substantially reduced. The main source of this reduction in protectionism is the agreements proliferation among countries for liberalization of commerce. This paper analyzes the national political conditions in which countries have concluded these agreements and find the factors influencing interstate cooperation economically. The interstate cooperation on commercial problems is subject to political regime types of contributors. Since it makes the states more democratic, they increasingly tend to conclude trade contracts. The findings are that the democratic states about 2 times tend to form a PTA as autocratic states and democracy pairs roughly 4 times tend to do so as autocratic pairs.

Was this article helpful?