Research On Sino-Australia FTA’s Effect On Bilateral Agricultural Product Trade

With the multilateral trading mechanism based on the level of regional economic integration gradually revealed some problems during operation:the increasing difficulty of global multilateral trade negotiations, slow progress and the inability to timely and effectively meet the aspirations of some countries to further promote trade liberalization, bilateral trade agreement has progressively become a complement to multilateral trade negotiations as well as an alternative way to achieve trade liberalization. In this context, Sino-Australia FTA talks was officially launched in2005. As of June8,2013, China and Australia have carried out19rounds of negotiations regarding to establishment of FTA. Among them, Sino-Australia agricultural product trade is an indispensable part of the bilateral trade as well as the focus and difficulty during the negotiation process.The major part of this paper starts with status and structure of bilateral agricultural product trade based on the method of comparative statistical analysis, which comes up with the conclusion that Sino-Australia agricultural product trade bears the feature of complementarities. Then, by calculating the relevant trade indexes such as Export Similarity Index (ESC), Index of Intra-industry (IIT) and Trade Competitiveness (TR), the paper quantitatively confirms the complementary agricultural trade relations between China and Australia and shows the absence of a strong competition of the two countries’agricultural product trade on the third-party markets.Secondly, dividing the2000-2012years into three periods, the paper takes use of the Constant Market Share Model to quantify different effects that stimulate the growth of bilateral agricultural product trade and compares the results of each country among periods. Next, based on a trade gravity model, the article conducts a regression analysis of the agricultural trade data and its possible influential factors between China and its47major trade partners. The results show that FTA has a positive effect on bilateral agricultural trade. Specifically speaking, the agricultural trade between China and its FTA partners is1.33times that of the non-FTA trade partners. In addition, the article also evaluates the agricultural trade potential between China and its trade partners, which indicates the situation of "Trade Insufficiency "on both the overall and classified Sino-Australia agricultural trade.Finally, according to conclusions obtained from relevant research, the article puts up with some applicable policy recommendations from different respects. That is, China should make full use of the agricultural comparative advantages and implement a differentiated export strategy to boost its agricultural export to Australia, thus narrowing the trade deficit; make reasonable adjustments on the import tariff structure to meet domestic demand for import agricultural product; facilitate the Sino-Australia FTA talks to further deepen the bilateral agricultural cooperation.