Analysis For Current Status And Future Potentiality Of China-Aus Tralia Trade About Agricultural Products Based On FTA

With the development of globalization and regional economy, multilateral trade negotiations have witnessed great challenges. As a result, bilateral trade agreements have become crucial in multilateral trade negotiations for supplementing.Against this background, in May,2005, China and Australia started a bilateral trade negotiation which has seen 22 rounds in a decade. Eventually, in 2015, China and Australia officially signed the Free Trade Agreement. In the negotiation, agriculture has been a sensitive and essential issue. In both countries, agriculture industry plays a key role in economic development. Since FTA took effect on December 20,2015, China-Australia relations about agricultural products expanded in a large scale. What’s more, Australian products entering into Chinese market began to benefit from tariff reduce.As a result, more and more Australian agricultural products are entering into China. The FTA has greatly boosted bilateral agricultural trade. On the other hand, we should not ignore the fact that China agricultural industry still lags behind its counterpart in Australia. Due to a higher mechanization level, Australia has less than 1.5% of its population who are involved in agriculture. In contrast, China has 40%. In other words, opening up agriculture will have greater impact on Chinese practitioners. Under this background, it is crucial for China to learn to enlarge agricultural trade with Australia and protect its own agriculture while moving toward to mutual benefit relations.Based on panel data of bilateral agricultural trade from 1992 to 2014 and with reference to the data of SITC.REV.3, present paper takes qualitative and quantitative approaches to analyze the current conditions and future potentiality of bilateral agricultural trade based on FTA. First of all, present paper takes bilateral agricultural trade as a cutting point to further analyze current conditions and features of bilateral agricultural trade covering both the whole industry and specified products. Preliminary, present paper concludes that China and Australia share a complementary relation in the field of agricultural trade. Furthermore, based on SITC rev.3 data from 1992 to 2014 in agricultural products, present paper calculates several trade indexes including IIT, HHI, TⅡ, TC and TCI. In addition, present paper analyzes China-Australia agricultural trade by quantitative approach. Results are as follows. First, most agricultural trade takes place crossing different sectors. Second, agricultural trade concentrates on several sectors. Third, Chinese agricultural products are not very competitive. Fourth, bilateral agricultural trade has supplemented each other. That is to say. China has been a key exporting market for export-oriented Australia. In return, Australia provides abundant agricultural resources for China. So, building up a free trade area will not only benefit both countries but also bilateral agricultural trade.On the other hand, present paper introduces the Gravity Model of Trade to give a regression analysis on agricultural trade volume and specified agricultural products trade data between China and other 30 major trading countries. The analysis shows that the Free Trade Agreement has positive effect on agricultural trade volume and different influence on specified agricultural products. Besides,bilateral agricultural products trade is positively related to GDP, FTA and negatively related to the distance between two countries. From product categories, free trade area has a greater influence on category zero and category one. And distance may hinder raw materials trade. Per capita GDP has significant influence on agricultural products. In a word, the establishment of China-Australia Free Trade Area will be a driving force for bilateral agricultural trade.Last but not the least, based on research and analysis, present paper provides some advice for agricultural products trade and the strengthening of FTA. In the first place, China should improve its competitiveness by implementing different exporting strategies for various products. Then, China should optimize its importing structure while dealing with greater domestic demand for importing products. In addition, China should tap exporting potentiality of agricultural product by taking good use of its comparative advantages. All in all, bearing the principle of mutual benefit, China and Australia shall push forward cooperation in agriculture by overcoming trade barriers and utilizing FTA.