An Analysis On Trade Of Agricultural Product Between Australia And China Based On FTA

In the process of global economic integration, the regional economic integration develops at an incredible rate recently. In 2005, FTA (Free Trade Agreement) negotiation was launched with the fact that economic integration had become the most important feature. The element endowments are complementary in China and Australia which means that the bilateral trade type is also complementary. Both China and Australia can benefit a lot if this complementarity can be used to full extent. Agricultural product trade is a significant facet of the bilateral trade and it is also sensitive and contentious in the negotiation. Thus, it is very important to analyze the agricultural product trade between China and Australia.This paper begins with the general description of agricultural product trade structure between China and Austrlia by simple statistical description. Then indicator calculation will be adopted to confirm the trade relationship (complementary or competing) between China and Australia. Indicators used include Inter-industry Trade Indicator (IIT), Trade Competitiveness Indicator (TC), Reavealed Competitive Advantage Indicator (RCA), Export Similarity Indicator (ESI) and Trade Complementarity Indicator (TCI). Conclusion can be drawn that the complementarity does exist in agricultural product trade between China and Australia.It is also analyzed in this paper which factors impact the change of agricultural product import from Australia to China (by using Constant Market Share Model). Demand factor, structure factor and competitiveness factor are taken into consideration. Empirical analysis demonstrates that demand factor plays the most important role in the determination of agricultural product import from Australia to China which means that the import is largely impacted by the total agricultural product import from the world. Competitiveness factor is not the most decisive factor due to the high competitiveness of Austrlia.In addition, this paper also deals with the impact on agricultural product import from Australia to China if FTA is finally established by simulating analysis. The impact on import will be analyzed in the perspective of general equilibrium by introducing other scholar's results. Econometrics model will be used to analyze how price factor impacts the import. It can be concluded that the establishment of FTA between China and Australia is conducive to strengthening Australia's import share of China. That is to say, active participation of China in bilateral trade integration increases the agricultural product import demand from Australia.Finally, several suggestions in terms of import, export and the establishment of FTA are represented based on the conclusions which are drawn from the previous analysis.