Free Trade Agreements have always sought to encourage the growth of two or more different countries. According to the free trade agreement, two or more countries can trade with low tariffs, exemption from import-export duties and other benefactors decided by the signatory countries. Economics is about satisfying needs and wants for different goods along with finding alternatives to scarce resources. No country can survive individually nor 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 is efficient in supplying or in other words open to trade with other countries for the same benefit, it can enter into an agreement with two or more countries. different countries so that each respective country's economy can profit from scarce resources and meet its own demands. To explain national trade we need to look at the economic theories mentioned below; The first concept to consider when making a trade agreement is called the theory of comparative advantage if a country has an advantage in producing a certain 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 the production process for a specific good, then that country can produce more and better quality of that good than all other countries. The following data describes the simplified form of the above mentioned theory:Australia ChinaNatural gas 40 8Other goods 4 20*Data are hypotheticalIn a certain period Australia can produce 40 tons of natural gas OR 4 Other goods using all its resources While China in the other h...... middle of paper ......endless competition given that China is the world leader in the entire sector. Often, China has a huge skilled workforce enabling innovation and distinct products and services at more affordable prices, something Australian manufacturers lack and may face fierce competition in the near future. From connecting all the above dots; I am convinced that the free trade agreement between Australia and China will bring positive consequences for both countries. Both countries will benefit from the FTA in the long run. On the contrary, in the short term this will cost major competition problems and other risk-related disparities. But looking forward to a bright future, it can be established that the free trade agreement between Australia and China will be favorable for both countries as they have their unique efficiency in producing different products and can satisfy each other's wants and needs..