Australiana And Aufta Case Study

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AUSTRALIA FOREIGN DIRECT INVETSMENT

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AUSTRALIA FOREIGN DIRECT INVETSMENT
FTA - Australia and China
The Australia-China trade and economic relations have continued to expand. China boasts of being the current Australia's biggest two-way trading partner valued at $160 billion Australian dollars in 2013-2014. On 17 November 2014, President Xi Jinping and Prime Minister Tony Abbott concluded the negotiations for the countries’ Free Trade Agreement (ChAFTA). FTA between the countries would enhance investment relationship and growing trade in the highly complementary economies. China views Australia as a dependable supplier of quality commodity inputs, resources and agriculture, for its fast growing industrial development. It is also accepted as a safe destination for Chinese tourists and a good China’s partner in foreign education for the Chinese nationals (Australia, & Hutchins, 2005). ChAFTA gives Australia and covers unlimited access to the Chinese Economy and enhances its competitive ability in manufacturing exports, investment, resources and energy, services and agriculture.
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The average applied tariff rate in Australia is 3.5 per cent and the countries tariff rates varies between 0 to 5 percent. The tariff rates in China are at 9.9 per cent and subject to allowable reduction, as per the ‘free’ agreement, to even zero percent.
China’s vast population will form a good market for the produced goods from the foreign company. The community will offer the Australian product a ready market and, therefore, assure it of guaranteed returns. A big local market with real purchasing power forms a better investment opportunity than a large population with lower purchasing
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