Essay On Free Trade Between Australia And China

Since Australia’s first free trade agreement (FTA) with New Zealand in 1983, Bilateral and Multilateral FTA’s have been a great advantage and focus in securing economic prosperity for Australia. Australia’s two-way trade in goods and services was A$616 bn in 2012. Australia has seven FTAs currently in force with New Zealand, Singapore, Thailand, US, Chile, ASEAN (with New Zealand) and Malaysia. Together, these countries account for 28% of Australia’s total trade, which displays the great benefit of bilateral FTAs to the Australian economy. Additionally, there are four bilateral FTA negotiations currently in place, two of which are substantial trading partners; China, being Australia’s largest export market (A$78.7 bn) and Japan, being Australia’s second largest export market (A$49.8 bn). The Japanese Free Trade Agreement has been negotiated, and will be a great benefit to the Australian economy, especially the agricultural sector, for example tariffs on beef

The Buying and selling, importing and exporting of goods and services, between two or more countries that have no limits or quotas or barriers or unbalanced tariffs is the dictionary definition for a free trade agreement (FTA). There are both advantages and disadvantages attached to FTA’s which is shown in figure 8.0.

Although Australia remains geographically isolated from the world, international trade still remains a main factor that allows Australia’s economy to prosper. Australia’s long history of trade has created tight links and connections with other nations. Being a member of many worldwide organisations, Australia has produced many free trade agreements with countries around the world. However, recently Australia has seen a change in the composition and direction of its trade and has developed a strong trade link with the Asia-Pacific Region.

Australia and China are two countries located in the southern and northern hemispheres respectively. They are both very important and major international exporters across the globe. Australian exports reached an all time high of A$29,970 million in February of 2014, this is a gain of A$120 million from the previous year. Australia’s natural resources are one of its main exports as Australia is so rich in its natural resources such as bauxite, coal, copper, tin, gold, iron ore, silver, uranium, tungsten, nickel, lead, zinc, diamonds, mineral sands, natural gas and petroleum.

The FTA would also improve productivity and availability of resources. This would push Australia in to being close to the leading economies of the world in the long-term view.

China is one of the biggest countries along with Thailand and Japan who make goods for Australia. Being Australia’s third largest merchandise trading partner and seventh largest service export market in 2003, China might significantly affect the Australian economy through any changes made to its trade policies. A more liberal Chinese trade policy could increase Australia’s income in part through greater market access for its exports. Of every hundred dollars of national

Australia and China both adopt different economic system in exchange for a substantial economic growth. China is in the process of a developing nation employing a command economy, which means the decisions on production and investment is decided upon the government. In comparison, Australia is a highly developed nation with a mixed market economy, meaning that the economy has a certain degree of planning involving the government, but the private sector dictates most of the economic decisions.

China and Australia are very different countries in terms of religion, culture, language, and system of government. However, there are some similarities in regards to the economic conditions of both countries. These economic conditions can be broken down into 6 sub-topics. First, in regards to economic growth, Australia and China have been remarkably resilient during times of economic downturn.

Economic development refers to the sustained actions of communities, federal, state, and local governments that improve our standard of living through the creation of jobs, new technologies, economic health, and the creation of an overall better quality of life. The comparison between the Australian economy and the Chinese economy provide a detailed and comprehensive view of both nations. China is of political, cultural and economic strategic importance to Australia. Economic growth, employment/unemployment, environmental sustainability, the role of government (in health care, education and welfare), and quality of life determine the economic development of a nation.

These export trade agreements, in the next two decades, will create thousands of available jobs, and also boost the GDP by approximately $25 billion, which benefits consumers, households and economic growth. There are several strategies under the new trade agreement that targets partnership and bring benefits:

Australia and China both benefit if Australia makes iron ore and resource goods and China makes manufactured goods

Since ancient times, societies have used forms of trade in order to benefit themselves and their communities. From bartering in Ancient Egypt, to the international trading the world has today, trading has found its way into various sectors of modern civilization. The idea of free trade dates back to sixteenth century Spain and it was believed by certain economists to be the reason why certain civilizations flourished more than others. Free trade was an idea The U.S., Canada and Mexico struck gold with when they implemented the North American Free Trade Agreement, better known as, “NAFTA”. The use of NAFTA is in America’s best interest because, it benefits U.S. jobs, improves trade relations, promoted specialization of trade.

The increasing trade with China will definitely influence the benefit of other trade partners of Canada. The more Canada import from China, the less benefits other countries gain. The U.S. goods trade deficit with Canada was $ 15 billion in 2015, a 57.1% decrease ($ 20 billion) over 2014. The total value of export trade is less than the total value of imports, which means to spend more foreign exchange for imports, and cause the reduce of foreign exchange reserves. Another reason is that as the power of China is rising, the other signatories to TPP will be worried that whether Canada will ignore the other side of China's rise, like its expansionist claims on maritime

In 1994, the leaders of the thirty-four democratic countries of the Western Hemisphere launched the process of creating a Free Trade Area of the Americas (FTAA). The FTAA will be established by 2010 with the aim of gradually eradicating barriers to trade and investment in the region. The final characteristics of the FTAA will be determined through negotiations by government officials from the thirty-four participating countries. The trade issues that are presently under discussion are: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property; antidumping, subsidies and countervailing duties; and competition policy. Guiding principles for these negotiations

While going through different studies some of them have find mixed and inclusive result like (Abrams, 1980 and Frankel et al, 1995), Most of the recent studies found that FTAs/PTAs has raised the trade volume between associated countries.( Baier & Bergstrand, 2007). However, the increase in trade volume is not similar in developed and developing countries. The less developed countries are un-natural trading partners because of their similar comparative advantage, same endowments, limited economic sizes and higher trade costs (Krugman, 1991 and Magee, 2003). Southern countries can play better role in North-South agreements than agreements among themselves, because of having