“Australia and China will sign a historical Free Trade Agreement (FTA) after the G20 Summit in Brisbane. Senator Bill Heffernan warned that the FTA could be a disaster for the country without proper protections. Will Australian farmers benefit from the FTA?”
A Free Trade Agreement:
A Free Trade Agreements (here in referred to as FTA), is designed to reduce or remove any barriers of trade between two trading partners. These barriers can be in the form of tariffs and import quotas on some, or all goods traded between two countries. When negotiating a FTA, it is important for both countries to negotiate in favor of their comparative advantage/s, as it enables both countries to reap the most benefits out of the arrangement.…show more content… It will also look at what foreign trade laws Australian exporters will need to consider before embarking on a trade relationship with China and what the flow on affects of a successful trade relationship are for the rest of the economy.
Why Australia entered into a FTA with China and what this means for Australian farmers.
Since 2009, China has been Australia’s primary trading partner for both imports and exports. Trading goods and services valued at more than $150 billion in 2013 and exporting up to $95 billion in 2013. China is also Australia’s largest source of goods imports, in 2013 Australia imported $47 billion in Chinese goods.
In relation to agriculture, China purchases more agriculture produce than any other market in the world and is predicted to account for 43 percent of world wide agriculture demand by 2050. Therefore, the China Australia FTA, puts Australian farmers in good stead to reap the benefits of what is predicted to be a continually growing and booming export market in China for many years to come.
In 2010, Australia exported approximately 25 percent of total exports to China. Of this amount, 11 percent came from Australia’s agriculture industry. Wool exports in particular, hold a strong position in the Chinese import market, with wool being third in line when it comes to Australia’s largest agriculture exports to China, after wheat and beef. In 2011, wool accounted for 9 percent of Australian agricultural