Comparison Among CAFTA, JAEPA And KAFTA

The world economy develops continuously, which improves the bilateral and multilateral trade, and deepens the economic cooperation among nations. The deepening of economic liberalization drives the development of the economic integration.However, due to the vast differences among countries on national politic, economy and culture, and the difficulties of the WTO negotiations, the process of economic globalization is facing the challenge of uncertainty. It is the continual frustration of integration that makes the countries and regions turn to the more flexible regional economic cooperation. In recent years, regional economic cooperation develops fast, and numerous Free Trade Agreements (FTAs) are established. After the East-Asian financial crisis in 1997, East Asian countries began to accelerate the pace of regional cooperation. Bilateral and multilateral regional integration organizations have set up. It is reported that, in 1991, there are only 8 FTAs in East Asia, and the number rapidly increased to 245 in 2011, among which 123 have taken effect.China, Japan, South Korea and ASEAN play vital roles in Asia. They are four important forces in the integration of Asia. ASEAN was the first FTA established in the area. In 2002, ASEAN signed Framework Agreement with China, and the CAFTA completed on January 1,2010. The JAEPA and KAFTA signed agreements in 2008 and 2009 respectively, and KAFTA was also completed on January 1,2010. However, the construction background of three FTAs is different. Considering their own interests, the terms of three FTAs are also different, which makes different effects among the three FTAs. The thesis attempts to compare the differences among three FTAs and their effects. According to the analysis on three FTAs’strategies, some enlightenment will be gained and the suggestions will be provided for regional cooperation in East Asia. The thesis is divided into seven chapters.The first chapter explains the research background and significance of the topic. It will review predecessors’ research and put forward the logical structure.The second chapter introduces the theory of regional economic integration, especially the theory of Customs Union on static and dynamic effects.The third chapter will explain the construction process of CAFTA, JAEPA and KAFTA. Different backgrounds of three FTAs will be compared.The fourth chapter will compare the terms of CAFTA, JAEPA and KAFTA. They are signed in 2004,2008 and 2009 respectively, which consider about their different political and economic interests. The thesis will analyze the details of three agreements on trade in goods, which is useful for the comparison of three FTAs. According to the comparison, the thesis will summarize the differences of three FTAs in terms, which will lay the foundation to the research of effects.The fifth chapter will focus on the economic effects of three FTAs. First, it will compare the trade of three FTAs by the gravity model empirically. Second, the effects on trade structure are affected differently among CAFTA, JAEPA and KAFTA. According to the index, the thesis will demonstrate the change of geography structure, commodity structure, industrial structure and the intra-industry trade. Third, the establishment of FTA also has impact on investment. Because of the different investment patterns of China, Japan and South Korea, the investment in the three countries shows different effects.The sixth chapter will compare the non-economic effects among three FTAs, including the international strategic position, the national security and non-traditional security benefits. The seventh chapter will summarize the main conclusions and draw inspirations,which will put forward some suggestions to the construction of "10+3" cooperation mechanism.Here are the main conclusions:First, the trade liberalization level of CAFTA is the highest among three FTAs, which lays a solid foundation for the effects of CAFTA. By contrast, the low level of JAEPA’s trade liberalization hindered its development to some extent.Second, comparing the economic effect, the thesis demonstrates four aspects, which are expansion effect, trade complementarities, industrial structure, and investment effect.Third, in terms of non-economic effect, China, Japan and South Korea’s international strategic position are all ascended. In the process of building FTA with ASEAN, the three countries developed good relationship with ASEAN countries in the fields of national security and non-traditional security. What’s more, they all won the support from ASEAN. At the same time, the construction of FTA makes Japan and South Korea transfer the energy strategy to Southeast Asia.Finally, "10+3" cooperation mechanism is the main channel of the East-Asian cooperation, but its development encounters many obstacles. The development of three "10+1" FTAs provides experience to the establishment of "10+3" cooperation mechanism. ASEAN needs to maintain the central position, and the cooperation among China, Japan and South Korea is urgent. China, Japan and South Korea have to strengthen the non-economic cooperation with ASEAN, as well as economic cooperation. The role of US in East Asia should be treated properly, and though the RCEP is under construction, it is necessary to realize the significance of the cooperation of "10+3".