Free trade agreements have always attempted and improved the growth of two different economies or countries. Under the free trade agreement, two or more countries can trade with low customs duties, exemption from import-export duties and other benefactors decided by the signatory countries. Economics is about satisfying needs and wants for different products while finding alternatives to scarce resources. No country can survive individually or produce all goods at the same time. As a result, a country that is naturally endowed with natural resources such as fossil fuels, mines, labor, etc. and it is efficient to supply or in other words open to trade with other countries for the same benefit, can enter into an agreement with two or more countries. different countries so that each economy of the respective countries can take advantage of the scarce resources and meet their demands. To explain the trade of the country, we need to look at the economic theories mentioned below; The first concept to consider when entering into a trade agreement is called the theory of comparative advantage: if a country has an advantage in the production of a product, it means that that country is considered the most efficient country to produce that particular product. In other words, if a country uses the same inputs in its production process for a specific good, then that country can produce more and better quality of that good compared to all other countries. The following data describes the simplified form of the theory mentioned above. :Australia ChinaNatural gas 40 8Other goods 4 20*Figures are hypothetical Over a certain period of time, Australia can produce either 40 tonnes of natural gas OR 4 other goods using all its resources while China on the other hand ,...... middle of paper ......fierce competition as China leads the entire sector in the world. Often, China has a huge skilled workforce that enables innovation and distinguished goods and services at cheaper prices, which Australian manufacturers lack and they may face stiff competition in the future close. I am convinced that the Australia-China FTA will have positive consequences for both countries. Both countries will benefit from the FTA in the long term. Conversely, in the short term, major competition issues and other risk-related disparities will be costly. But looking forward to a bright future, it can be determined that the Australia-China Free Trade Agreement will be favorable to both countries, because they have their own unique efficiency in producing different products and can satisfy everyone's wants and needs..