By Alasdair Pal

SYDNEY (Reuters) -Australia and Vanuatu on Wednesday agreed a A$500 million ($326.50 million) deal to strengthen economic and security ties between the two countries, amid increasing competition from China, the Pacific island nation’s largest external creditor.

Vanuatu Prime Minister Jotham Napat said the deal, known as the Nakamal Agreement, will see Australia invest the funds into Vanuatu over the next decade and was a “win win” for both countries.

“The agreement… will transpire into a lot of trade benefits between the two countries, whether it be the security agreement, economic transformation, with some specific focus on labour mobility,” Napat told a news conference on the island of Tanna in southern Vanuatu.

Australia Deputy Prime Minister Richard Marles said the

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