Analysis Of The Effects Of China-Australia FTA On Bilateral Trade Of Agriculture Products

With the development of economic globalization, regional economic integration is also experiencing a rapid development. Countries sign free trade agreements to promote bilateral trade, investment and economic growth. China and Australia started FTA negotiation from 2005, and signed the China-Australia FTA in June 2015 after the 21 rounds and 10 years of negotiation. This is the first time for China to sign a FTA with a main developed country which has a large scale of economy. In the process of negotiation, the issue of agricultural products had run through to be the difficulty and focus. China and Australia are all the main producing and trading countries of agricultural products in the world. The FTA will surely exert influence on the trade of agricultural products between China and Australia. So it’s meaningful to have a research on this issue.There are 6 parts in this paper. Section 1 is the introduction, which introducing the research background and significance, the research idea and methods, the main innovations and shortcomings and concluding with the definition of agricultural products in this paper.Section 2 is paper review. It reviews both domestic and foreign research on the comprehensive economic effect of FTA, the impact of FTA on producing and trade of agricultural products and the related works on China-Australia FTA.Section 3 is a description of trade barrier of China and Australia and the content of China-Australia FTA. It compares the tariff and non-tariff barrier between China and Australia. The results show that Australia has a lower tariff barrier but a stricter non-tariff barrier than China. Besides, this section also introduces the process of negotiation, the outcomes of FTA and the related regulations on agricultural products.Section 4 analyses the relationship of agricultural trade between China and Australia. It summarizes the trade relationship between the two countries about trade amount and structure, then it uses several trade indices to describe the close connection, unbalance, competitiveness and complementarity of bilateral agricultural trade. The results show that the agricultural trade is experiencing an increasingly close connection but unbalance. China is always in the adverse balance status and the gap is expanding. The competitiveness has been weakened but the complementarity grows due to the different factor endowments. At last, this section uses CMS model to analyze the factors that influence agricultural trade between these two countries and comes out that the increasing export from China to Australia is due to the enlarging of Australia’s agricultural market. However, China fails to adapt to the market structure of Australia.Section 5 is the empirical analysis of the impact of China-Australia FTA on bilateral agricultural products trade. This section set up a gravity model using the trade data of 40 countries to analyze the factors that impact trade of agricultural products. The results show that FTA will promote bilateral trade. Besides, GDP of the two trade partners, trade dependence and agricultural added value out of GDP show positive correlation with agricultural trade. While distance, average agricultural MFNs and turnover time of import and export show negative correlation with agricultural trade.Section 6 is the conclusions and suggestions. Based on the above suggestions, this paper gives 3 suggestions for China from 3 aspects, which are how to expand export to Australia, how to face to the possible challenges of import from Australia and how to promote investment and cooperation of agriculture between China and Australia.