Study On Feasibility And Effects Of Sino-South Korea Free Trade Agreement

With the rapid developing of regional free trade in the worldwide,China begin to attch great importance to the fuction of bilateral free trade agreements while taking active participation in the negotiation of multilateral free trade. Particularly, under the circumstance of negative feedback from the multilateral free trade agreements and unfair trade environment, China began to pay more attention to the bilateral free trade agreements. Until now, many bilateral free trade zone has already been set up, such as with ASEAN, Pakistan, Chile, New Zealand, Singapore while some other bilateral free trade zones are under negotiation, taking China and South Korea Free Trade Area for example.In fact, China and South Korea has conduct many discussions as to the establishment of the bilateral free trade zone. Particularly, in April 2007 Chinese Prime Minister Wen Jiabao was invited by South Korean President Roh Moo-hyun's to visit to Korea, during the visite, he urged both sides to deepen economic and trade cooperation, work out a win-win solution for the China-South Korea free trade zone as soon as possible and set a firm foundation for the zone. South Korean President Roh Moo-hyun also made declare clearly that South Korea is willing to actively promote the negotiation between both sides, commit to the elimination of barriers which debar Chinese goods into the Korea market, and to make great effert for the balanced development of bilateral trade. This has really greatly shorten the eatablish of China-South Korea Free Trade Zone. lately in June 2007 the joint research of Sino-South Korea Free Trade Zone was lunched by Government, industry and academia between China and Korea.Now, Five conference have been held and two sides began negotiation regarding important sectors,such as agriculture, forestry and fisheries since the third meeting, which means the begin of the material stage of the research.However, agriculture products are very essential to nation economy, to further open up the market will bring two countries bothe great opportunities and severe challenges. Especially, China' agricultural production has a strong endowment of natural resources advantages and labor advantages, thus has a strong price advantage, while South Korea's agricultural production is not developed enough, the market prices of agricultural products is relatively high. As a consequence, many people are worried about that with the establish of Sino-South Korea Free Trade Zone,Korea's agriculture will face tremendous impact after market opening up. Considering the possible serious consequences, the related industries department from both sides hold a big doubts of the establish of Sino-South Korea Free Trade Zone.In order to eliminate the doubts and the barrier to the establishment of Sino-South Korea Free Trade Zone, it is very necessary to give a deep research to the development trends of Sino-South Korea agricultral trade and the effect from FTA to both sides. Therefore, on the base of predecessors'relative theorial studies on agriculture trade and free trade zone, this paper firstly demonstrate the feasibility of the establishing of free trade zone through surveying the competitive trade and complementary trade in agricultural products. Secondly, stand on the macro level to analysis the impact from Sino-South Korea free trade zone to the bilateral trade in agricultural products; Thirdly, in view of the establishment of Sino-South Korea free trade zone may impact the sensitive agricultural industry, and rice industry take an essential role in the whole agricultural industry. Thus, this paper take the rice industry as an example, give a deep research to the impact from Sino-Korea FTA to the output and demand, import and export, and market price in rice and other relative industry. Finally, this paper come up with some suggestions on how to early build up the Sino-South Korea free trade area from the perspective of trade in agricultural products from the view of agricultural trade. The paper is consist of seven chapters, the main contents are as follows:Chapter 1 is the introduction of this paper.It introduces research background and significance,the content of research,and the possible innovations of this paper.Chapter 2 has outlined the research rationale of CKFTA in order to provide the theoretical frame for the following empirical study.It includes the literature review of Comparative Advantage,Free Trade Agreement and the literature review about China-South Korea Free Trade Area.Chapter 3, An empirical analysis about the trade on agricultural products between China and South Korea. The main target of this chapter is to search for the cooperative foundation on agricultural products trade between China and South Korea.It includs description on the circumstance and trend about agricultural products trade betweenthese two countries;It also analysis the export stucture of agricultural products.At the end of this chapter,it calculate related figures on agricultural products via the index of revealed comparative advantage so as to find out the basis of bilateral trade on agricultural products.Chapter 4, An empirical analysis on trade complementary and trade intensity about agricultural products between China and South Korea. Based on the analysis about the comparative advantages on agricultural products between China and South Korea, this chapter focus on the cooperative potentials so as to find the trend about agricultural products between those two countries.Chapter 5, The effect of FTA between China and South Korea to the trade of agricultural products. It intends to solve those problems, such as whether the establish of CKFTA can bring benefit to agricultural products, etc.In this chapter,an general equilibrium-GTAP model is used to predict the effect brought by the tariff remove of agricultural products.Several sceneries are set up and then simulated,simulating results includes the effects on price,import and export of agricultural products.Chapter 6,The specific effects on paddy rice and other agricultural products,take paddy rice for an example. As the most significant products,paddy rice plays an important role in food safety system.With widely open,it may cause a series of problems,not only to paddy rice itself,but also to some other sectors between China and South Korea.In this chapter, CGE model and Partial equilibrium model will be used in this chapter to analysis the effect on the output,demand,the value of import and export,market price, etc.Chapter 7,Summary and policy recommendations. This chapter made a conclusion to the study. And based on this, it analysis the current barriers to agricultural trade between China and South Korea and make corresponding policy recommendations.