China - Australia Free Trade Area Of ​​the Trade Effect

Nowadays, China and Australia are driving the founding of their Free Trade Area (FTA). On the analytical basis being in progress to regional economies integration theory and fundamental condition of China-Australia economic and trade relationship, the thesis is indicated by quantify studies that, main behavior of China-Australia trade relation characteristics are complementarily is very strong in the whole condition, China-Australia has comparative advantage on the labor-intensive product and the intensive product of resource, inter-industry trade is the main form of International division of trade between China and Australia. If China and Australia set up FTA, both countries' comparative advantage can be bring into play and the welfare can be improved. There is no doubt that this project will greatly influence the actuality and the future of the trade and economy of China and Australia.In order to achieve the trade creation effect and trade deviation effect of China-Australia FTA, the research based on partial balanced model to analyze the effect of import commodities' price and need if reducing or canceling the customs duties. The model result demonstrates the China and Australia FTA will bring gigantic trade creation effect. General trade creation effect is about 2,213,000,000 U.S. dollar, which is equal to that amount of 5.93% Australia exports to China in 2008; General trade deviation effect is about 2,450,000,000 U.S. dollar, which is equal to amount of 6.57% that Australia exports to China in 2008 and amount of 0.22% other countries exports to China. The effect is so small that the gravity of China imports from other countries can be ignore nearly. Totally, extent of trade creation effect and trade deviation effect in agriculture and labor-intensive industry is much more bigger. The extent of trade creation effect and trade deviation effect in capital and technology-intensive industry is relatively less. Judging from concrete industry, though the products scale of Australia exports, such as agricultural product, food, paper products, hide and leather product, mineral material to China is limited at present, but after signs FTA agreement, estimating that relevant product's export to China will increase quickly. Because of the mineral product's customs duties currently is very low, in a short time the trade creation effect of mineral product is limited, but China can get a long-term guarantee system of import mineral product by building China-Australia FTA. Both Australian industry and agriculture will get benefit, benefit gained by agriculture is greater than industry. China is labor-intensive industry get benefits mainly, the agriculture will be impacted.As for the bringing two countries' comparative advantage into play, the FTA agreement can consider the arrangements of tariff course, range and extent in the future. In the process of setting up China-Australia FTA, suggesting our government adopt measure removing a trade wall, adjusting exports structure, developing deep-seated estate division of work, opening to the outside world with allotting a step and according to plan for sensitive estate, such as agriculture. At the same time, accelerating China and Australia doubling piece investment, driving economic and technological cooperation, the economic and trade relationship will deduce new step between China and Australia.