Free trade agreement is a legal agreement between two or more countries aimed at removing barriers to trade and investment. It creates the free movement of goods, services and investments between different countries. The FTA allows countries to grant each other access to a preferential market. It helps to promote and streamline trade and investment flows between two or more countries. Australia and China have contributed to a very powerful and fastest growing trade and economic relationship. In recent decades, China has become Australia's largest bilateral trading partner, which is of great significance to Australia's economic future. Negotiations on the Free Trade Agreement (FTO) began on 18 April 2005 between Australia and China following the consideration of a joint feasibility study. In March 2005, the study was completed and concluded that with the help of the FTA, both countries would achieve economic benefits. The FTA has various benefits for both countries. Free trade allows both countries to become experts in producing products for which they have less knowledge. This benefits consumers as they can get a wide variety of goods and services available in the country. market.There was the 19th round of negotiations between Australia and China, the first round of which took place on May 23, 2005 in Sydney, the second round took place in Beijing from August 22 to 24, 2005, the third round from 2 to 4 November 2005 and the recent round of negotiations which took place in Beijing from 4 to 6 June 2013. Australia is known to export goods overseas, including China, and in return, she receives a large amount of money, this money is then used to import other goods like cars and other electrical equipment. .Due to free trade between Australia and China m...... middle of paper ......r D, 100 tons of natural gas costs 170 million other goods, 1 ton of gas natural costs 170/100, that is to say 17/10 of other goods. It is concluded that the Australia-China Free Trade Agreement would bring several benefits to both countries. Goods produced by China in large quantities may cost less to local residents because they are readily available, but when exported to countries like Australia, demand may increase due to the scarcity of these products. Employment opportunities may increase in China due to the large number of productions of other products like clothing, toys, electronic equipment. The Chinese population may feel tired. goods produced in their country and can move on. If a country produces products once a year, people will be willing to pay a high price for that product, but if it is easily available, no one bothers to buy it. .