Free Trade Agreement Between China and Australia

essay A

Get Full Essay

Get access to this section to get all the help you need with your essay and educational goals.

Get Access

Free Trade Agreement between Australia and China China, Australia’s second larges export destination, is a growing economy. The labours in china are really cheap, so a lot of companies set up new manufactures in China and close down manufactures in other countries. A Chinese is satisfied getting 800 yean month, three meals a day and a bed to sleep. There are also people, who are willing to work for even lower labours. So if Australia would have a FTA with china it could profit from the fast growth and development of China.

China’s growing manufacturing industry needs large volumes of raw materials, which could be supplied by Australia. “Most Farmers and key agricultural exporters –wool, beef, dairy and grains- have set up their sights on an FTA” (Philip Hopkins,Ian Porter). The mineral export to China would also benefit from a FTA as well as the services-section. I think the growing economy will affect the live-standard of the Chinese population. The companies move to China, so there are a lot of jobs.

When the people have work they earn money, which they can spend on good products.I think the people, who have enough money, prefer to buy product with high quality. So they buy imported goods, which have a higher quality then the Chinese products. Supermarkets have an increasing role in China.

Supermarkets require a quality standard. So Australia, which can deliver high-quality goods, will have increasing exports. Now, the Chinese have also credit cards, which will increase the spending level. The population of Australia would also profit from a FTA, because there will be more products from China.

The products from China are cheap compared to the Australian.China could import a lot of cheap food, so that the Australian don’t have to spend that much money on food. So the FTA would lift the living-standard of the Australians. “An agreement to remove all barriers would lift the GDP of both counties in 2015 by 0. 4 per cent” (Tim Colebatch,economics editor). “The deal could worth 18US$bilion to the Australian economy and US$64 billion to China between 2006 and 2015.

The FTA will be a model of how to countries, so different in many respects, can share an economic future. ”(the Age,April 20,2005 ) But there are also disadvantages.While Australia’s wool industry and other sections of Australia’s economy would profit from the FTA, there are also losers. The car, clothing and vegetable industry could be destroyed by the Chinese exports, because the Chinese producers can offer their products much cheaper.

“But they don’t face the same quality assurance condition and have access to cheap labour. ”(the Age,April 20, 2005) China could swamp Australia with below-cost imports. The Australian producers aren’t competitive, so they will loose market shares.Before the negotiations begin, Australia has to recognize China as a market economy. “But the prices for Chinese products appear to be set by authorities instead of markets”(the Age, December 6,2004) and the products are often dumped, so a recognition would undermine Australia’s anti-dumping powers.

Chinas rules of law in commerce are still underdeveloped and the economy isn’t fully transparent. If Australia recognises china as a market economy the minister isn’t required to resort surrogacy, where unreliable or no pricing information is available.So there would be Legislative or administrative changes needed to undertake action against predatory priced products dumped on the Australian market. Besides China’s benefits of this deal will be grater than the Australian ones, because China is enjoying a strong surplus in its trade with Australia. It is exporting much more than Australia is exporting to China. “When there wouldn’t be a FTA Australia’s export to China would grow faster by 2015 than China’s export to Australia.

” And there are still risks, shown by SARS, investigating in China’s economy. There could be other disease and disasters.

Get access to
knowledge base

MOney Back
No Hidden
Knowledge base
Become a Member