Study On The Economic Effect Of KORUS FTA On South Korea

With the global trade and investment pattern usher in a new round of change,the current free trade agreement has gradually become an effective way for major powers to dominate global trade rules,the standards continue to improve,The economic impact on member countries is broader than that of traditional free trade agreements.KORUS FTA is the result of the two countries in pursuit of maximizing their own interests,its commodity market open rate as high as 99.8%,reflect the characteristics of the high standard of trade agreement advocated by the United States in terms of investment,service trade,competition policy,intellectual property,dispute settlement mechanism,labor standards and environmental standards.On the other hand,as the first Northeast Asian country to conclude the FTA with the United States,the economic effects of the KORUS FTA also play an important exemplary role for the countries in the region.Based on this background,this paper focus on the impact of the KORUS FTA on Korea's,such as import and export trade,industrial competitiveness,labor force employment and regional economic cooperation,to explore the actual economic effect of the KORUS FTA.This paper considered that the main reason for South Korea's conclusion of KORUS FTA lies in obtaining economic benefits,including seizing opportunities in the U.S.market,expanding exports,and accelerating industrial restructuring and upgrading,which in turn will give new impetus to the country's economic growth.The gravitation model results show that during the five-year period when the KORUS FTA took effect,it has played a positive role in the growth of bilateral trade.However,as the agreement came into effect at a time when the world economy was undergoing a period of profound adjustment after the 2008 financial crisis,the global economy downturn and the declined growth momentum of trade.The external environment posed challenges to the economic effects of the KORUS FTA.Taking into account the external environment,the KORUS FTA took effect 5 years ago,Korea basically achieved the agreed target at the macro level,not only to achieve steady growth of exports to the United States,strengthening the competitive advantages of industries and accelerating the transformation and upgrading of disadvantaged industries,but also It has achieved positive results in enhancing the initiative in the process of economic integration in East Asia.This paper consists of eight Chapters.Chapter 1 “Introduction",this chapter gives a brief introduction to the subject conception,and summarizes the research significance,the current situation of the research,and the possible innovation,necessity of further research.Chapter 2 "Basic Concepts and Theoretical Basis of Economic Impacts of Free Trade Agreements".This chapter clarifies the basic concepts of free trade agreement.On this basis,the paper systematically combs the theory of economic impact analysis of existing free trade agreements,and constructs the theoretical framework of this study.Chapter 3 "South Korea's motivation of the Korea-US free trade agreement and the field of negotiations",analyzed the deep motivation of Korea to conclude the KORUS FTA,and then,paper reviewed main controversial areas of the Korea-US free trade agreement,analyzes the exchange of benefits between Korea and the United States in the negotiation process.Studies indicate that economic effects play an important role in South Korea's decision-making.Chapter 4 "The trade effect of Korea-US Free Trade Agreement on Korea",makes an empirical analysis on the trade effect of KORUS FTA with Korea as the research subject.On this basis,paper also analyzes the trade substitution effect of KORUS FTA on China and Japan.According to the research,the KORUS FTA's trade effect on South Korea is mainly reflected in the aspect of export.After the agreement entry into force,South Korea's export growth to the United States is higher than that of its import.However,the reduction of tariffs on U.S.products by South Korea has increased the difficulty of export to China and Japan,and Japan faces greater trade substitution risk than China.Chapter 5 "The Impact of KORUS FTA on Korean Industrial Competitiveness",analyzes the impact of KORUS FTA on the Industrial competitiveness of Korea,from perspectives of competitive strength,competitive potential and competitive environment.In terms of competitive strength,KORUS FTA has strengthened the competitiveness of South Korea's dominant industries.In particular,the competitiveness of industries with weak competitive advantages has been effectively enhanced,but the competitiveness of disadvantaged industries has been further weakened.From the perspective of competition potential,the rapid growth of South Korea's technology-oriented direct investment in the United States is in favor of technological progress of enterprises.The expansion of intra-industry trade index shows that the specialization of labor in the two countries has been further strengthened.In terms of the competitive environment,the enhanced IPR protection system has increased the royalty of enterprises for a short period of time,but the long-term examination is conducive to improving the innovation mechanismChapter 6 "Impact of the KORUS FTA on the Employment of Korean Labor Force",this chapter focused on the employment effect of KORUS FTA.The study shows that the positive impact of the agreement on the employment of Korean labor force is mainly reflected in the increase in the number of enterprises in the export sector and the absorption of the labor of the foreign investment enterprises.The negative effects are mainly reflected in the agricultural field,especially in the field of crop farmingChapter 7 "Impact of the KORUS FTA on South Korea's Regional Economic Cooperation",which focuses on the macro-regional effects of the KORUS FTA.The study argues that the FTA negotiation fundamentally reverse Korea's passive situation in the process of regional economic integrate,greatly enhanced its position in the global economic and trade structure.Chapter 8,"The Prospects of KORUS FTA,Enlightenment and Recommendations",assesse and summarized the economic impact of KORUS FTA.Combining the doubt voices of the United States to KORUS FTA,this chapter also explored the prospects for the development of the KORUS FTA and conducted preliminary judgments on the possible controversial areas for future negotiations between two countries.Finally,the "conclusion" section summarizes the main points of this paper.