The Commodity Structure And Trade Effect Of The China-Australia FTA

Along with the economic globalization deepens, many countries and regions have taken part more actively in the international labor division system. However, the dragging process of WTO multilateral negotiations has provoked regional economic integration as a complementary forms of the transition phase, which has showed a strong momentum of development. As a result, the establishment of free trade areas and the conclusion of bilateral free trade agreements show a significantly sharp up- ward trend.China and Australia are both the Asia-Pacific countries, since the 1972 establish- ment of their diplomatic relations, bilateral relations have developed steadily. On May 23, 2005, China and Australia started up the first round of FTA negotiations, and has been carried out 10 rounds of the free trade agreement negotiations, the two sides will expand cooperation in the manufacturing, agriculture, energy and the areas of resources, and more within that of mutual consultations, the Chinese and Australian economic cooperation will enter a new stage.Based on the theory of customs unions and the free trade area theory this thesis has analysed China and Australia's present status of import and export trade, including complementary and competitive discuss over their trade structure, as well as in-depth analysis on the major commodity categories. Moreover, it forecasts China's import and export trade to Australia, the upgrading of the industrial structure and the impact of investment after the establishment of China-Australia free trade area, and finally gives suggestion on the policies of our country.The main conclusions of the thesis are as follow:First, China and Australia shows complementary commodity trade structure. Australia's comparative advantage lies in resource-intensive commodities such as agricultural and mineral goods, while China is labor-intensive such as textile and garment products and has grown to technology, capital - intensive in recent years, such as mechanical and electronic products. All these above characteristics also conspicuously displayed in the merchandise trade.Second, qualitative analysis shows that with the establishment of China-Australian free trade area and the tariff reduction or even abolishment, the two countries' inter-industry trade, which is based on comparative advantages and factor endowments will be further expanded, and will also promote the intra-industry trade in chemical machinery and electronic products and the upgrading of the industrial structure;Third, empirical research shows that since the establishment of a free trade area, the reduction of tariffs has a notable impact on both China's import and export to Australia, but what should be point out is that China's import from Australia is influenced by the size of the domestic market to a greater extent. This is because China's major imports from Australia are of low demand elasticity while the demand of the national economy is rigid.Fourth, China should gradually reduce tariffs, establish an industrial damage compensation mechanism to help the domestic industry with an effective defense towards the Australian imported products' impact on the domestic market, meanwhile, it should promote the development of intra-industry trade, and improve the level of industrial division of labor between the two countries and stimulate domestic industrial structure upgrading, finally, it should also strengthen communication and consultation between the two countries and establish a trade dispute settlement mechanism.