system
Given the following post, respond as if you're commenting on Reddit:
human
A question about Australia and free trade.

Hi. I honestly know nothing about Economics so this might be a stupid question, haha.

I‘ve been taking a look at Australia’s economy and how it hasn’t had a recession in more than 27 years, which is an amazing feat. I read that one of the measures they applied was implementing free trade, reducing tariffs (by 25% I guess) and all that.

I’ve been thinking. Due to Australia’s distance to the rest of the world and sheer transportation costs, one could argue that national companies have an advantage over foreign companies because they won’t have to deal with high transportation costs. Therefore, national products tend to be more competitive than their foreign counterparts. Sort of a natural tax, I’d say. Evidently, there will be industries in which this doesn’t apply (tech?).

Therefore, free trade wouldn’t be damaging to the national industry in Australia as, let’s say, Portugal. German products can be delivered in Portugal a lot more easily than Chinese products in Australia.

Thinking now, every country would have this advantage to some degree, but especially Australia because of the long distance.

Am I right? Partially right? 100% Bullshit? Teach me!
gpt
It's not a bad hypothesis. The gravity model of trade (which emphasises short distance as a determinant of trade between countries) is near universal in the literature.

The problem is, when Australia removed it's tariffs in the 80s, the immediate response was the collapse of trade exposed manufacturing. We now make no cars, almost no clothes, not much steel etc. Australia is the poster child for trade and comparative advantage leading to specialisation. We dig things up and do services. We don't do low skill manufacturing (except for things you can't easily trade like food)