| The multilateral free trade system which led by WTO has slowed down Since 1990's, especially from The Hong Kong Ministerial Conference in 2005 on, the system has stepped into the temporary predicament with the essential content of the agreement not well implemented. In the meanwhile, the growing trend of regional integration has sped up all over the world and plenty of regional or bilateral free trade agreements have been developed to some extent.The legal frameworks of both free trade agreements (FTA) and the World Trade Organization (WTO) are completely compatible, what is more, both FTA and WTO can help to promote the inner-regional and interregional trade liberalization and promote global economic integration. Nowadays, more and more economies have signed numbers of bilateral free trade agreements to promote international trade growth and achieve economic benefits, and this trend is gradually sweeping the world. According to the WTO's official data statistics, by the end of 2007, there have been 230 RTAs (Regional Trade Agreements) at the entry into force with 140 FTAs included.Members of the East Asian region are mainly made up of ASEAN, China, Japan and South Korea. The current market linkage and institutional interoperability construction of regional economic integration are still in the initial stage, and the overall level of regional economic and trade cooperation and institutional mechanisms are mainly represented by"10 +3"meeting and the East Asia Summit. However, the former is the main channel of economic and trade cooperation in East Asia, and the latter is the main forum for high-level. Compared with North America FTA and Europe Union, the level and degree of the economic integration and trade cooperation in East Asia as a whole are only in the infancy, the official cooperation mechanism is still relatively loose. At present, the bilateral FTAs in East Asia have emerged very broadly, as of mid-December 2008, 31 regional or bilateral FTAs from 13 economies have entered into force in East Asia.Since the formal establishment of diplomatic relations in 1992, bilateral trade and direct investment of China and South Korea have been expanding enormously, and economic relationship has get closer. In the field of bilateral import and export trade, Korea is China's fourth largest trade partner, while China has become Korea's largest trade partners. In 2007, China's import and export trade with South Korea amounted to 159.898 billion U.S. dollars with the total importing from South Korea 103.757 billion U.S. dollars and exporting to South Korea 133.951 billion U.S. dollars, secondly behind Japan's level of 236.022 billion U.S. dollars.In the field of foreign direct investment, South Korea's direct investment in mainland China started rather late and has grown faster. As of the end of 2007, South Korea over the years accumulated actual foreign direct investment amounted to 108.8 billion U.S. dollars, and China is its first biggest FDI target country, absorbing totally 68,299 direct investment projects and the actual amount of direct investment 25.7 billion U.S. dollars, accounting for 23.46% of the total, higher than 23.64% of the United States. In contrast, China's direct investment in Korea is relatively limited.China and South Korea have kept a close trade and investment relationship. For the Korea's economic recovery after the financial crisis breaking in 2007, and also for its industrial development, it definitely means a lot that how to make use of the huge China's market demand, take the chance of China's comprehensive upgrade industries.For China's part, complete industry upgrading need much support of industrial funds and techniques. To keep closer relationship with economies in the region including South Korea could help China's enterprises to invest aboard, strengthen theirs international competitive ability, and share more market. The two countries have got the same successful experience of economic grow in the past decades, that is export orientation policy. The degrees of correlation between the international trade and economic growth of both China and South Korea are high. From 1992 to 2007, the correlation coefficients of the two countries are accordingly 0.9745 and 0.9138. By 2006, the foreign trade dependences of economic growth of China and South Korea are respectively 11.26% and 68.07%, and the demonstration analysis also support the conclusion that the foreign trade has accumulated the economic growth. It turns out that the bilateral FTA between two countries will gain grand benefits for promoting the trade and economic scale increasing of them.Because of trade liberalization on tariff reduction and elimination, for China and South Korea in terms of a bilateral FTA, a unified market of production factors and commodities markets will formed relatively easily, and economic efficiency of resource allocation would be further elevated, the degree of industrial specialization and intensification will be significantly strengthened to a large extent, all of which will promote the development of bilateral import and export trade to grow persistently, with a greater"trade creation"effect. Because of the localization of production can effectively avoid the rules of origin, the establishment of China-South Korea bilateral FTA will help increase the FDI flow not only inside the two partner countries, but also from third countries outside the partners. Furthermore, the inward FDI will definitely generate enormous technological spillover effects, which also is one of the important goals pursued by China-South Korea FTA.So far, the progress of China-South Korea bilateral FTA is still in the transition phase from feasibility study to official negotiations. Since the first meeting held on March 2007 in Beijing since, up to the end of 2008, the two sides have held 5 joint study sessions. Meetings have achieved plenty of detailed and in-depth accords about rules of origin, agricultural and services trade, investment promotion, intellectual property rights and many other fields which are involved in the bilateral free trade, and they have reached the vast majority of the consensus problem, which will help to launch bilateral formal FTA negotiation between China and South Korea. After the accomplishment of the bilateral studies, the reports are supposed to submit to their respective governments.Inside the international industrial division system of East Asia, the South Korea is in the upper position of the industrial chain, while China is relatively low at the location of the industrial division. Seeing the import and export trade and investment structure, we find that exports from China to South Korea are made up mainly of agricultural (including seafood), textile and other light industry products as well as some industrial products, while South Korea's exports to China mainly include electronic components, optical and medical devices, auto parts, as well as the sophisticated mechanical and electrical products, steel products which belong to capital-intensive and technology-intensive industries. Because of the complementarity both of the industrial division in the East Asian and of trade and investment structure, it indicates that the future economic and trade cooperation between the two countries should be strengthened through the bilateral FTA in order to enhance co-production efficiency of interoperability.To gain reciprocal achievements, the negotiation and implementation process of China-South Korea bilateral FTA require some principles including mutual benefit principle, the principle of comprehensiveness, the principle of progressive, substantive principle and consistency principle. In the aspect of liberalization, China-South Korea bilateral FTA negotiations are expected to be in full swing in late 2009, and successfully accomplished at the end of 2010, and quickly sail towards the signing of "Agreement on Sino-South Korea trade in services". Therefore, apart from some sensitive areas (agriculture, service trade, steel and auto, etc.), the two sides should immediately abolish the majority of import tariffs of merchandise and general non-tariff barriers around 2010, as of 2015, the import and export goods tariff and non-tariff barriers are supposed to be canceled progressively and completely, and lots of pragmatic arrangements about opening trade in services should be achieved then. In the aspect of trade facilitation, both sides should strive to further reduce bilateral trade transaction costs, improve customs clearance efficiency and reduce customs procedures and so on before 2010; in the aspect of investment facilitation, in the 5 years it is quite necessary to strengthen the cooperation of investment promotion agencies between the two countries so as to provide more equitable, transparent and convenient investment environment.In the process of building the China-South Korea bilateral FTA negotiations, it is necessary to adhere to combine the overall advancement with part priority. On the one hand, China and South Korea should construct a wide range of bilateral free-trade zone and a comprehensive bilateral FTA; On the other hand, through the priority cooperation between the regions and cities of two sides with similar level of development, facilitate communication for commodity and information flow, a comprehensive FTA is finally constructed.China and South Korea are the two most dynamic regional economies in East Asia, and China- South Korea bilateral FTA are very positive to strengthen cooperation, explore new modes of economic cooperation, and weaken the region economic and political instability, and the"10 +1","10 +3"cooperation process will step further to promote East Asian regional economic cooperation and integration process forward through the crucial breakthrough.
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