Study On The China Asean Free Trade Area “upgraded Version”

Amidst the economic globalization,Cooperative Free Trade Areas have flourished all over the world,including China-ASEAN Free Trade Area.In the preliminary stage of China-ASEAN Free Trade Area,both parties have substantially reduced or eliminated tariff and non-tariff barriers,resulting in a significant increase in bilateral trade flow,which has boosted bilateral economic development.Causing by China and ASEAN economic expansion,the former signed agreements on free trade areas can no longer meet the needs of current reciprocal economic challenges.On November 21,2015 after long negotiations,both parties formally signed a protocol to upgrade their free trade agreement in Kuala Lumpur,Malaysia.The main purposes are to enrich,supplement and improve the existing agreements together with upgrading the standards of the free trade agreements.However,the improvement of trade liberalization is also a double-edged sword.Due to the vast majority of ASEAN countries and China are classified as developing countries producing the same products and using the similar resources,it leads to fierce competitions among members.The impact of free trade on various industries in some member countries coupled with adverse effects from outside the region brings more challenges on the future development of China-ASEAN Free Trade Area.Therefore,it is necessary to further study the upgrading China-ASEAN Free Trade Area in order to minimize possible risks in Free Trade Area cooperation and promote the sustainable cooperative development of regional economic integration between China and ASEAN.This article will focus on: 1.The reasons for upgrading and the current process.2.The impacts from establishing Free Trade Area on the trade development between China and ASEAN.3.The impacts after upgrading Free Trade Agreement on the economy and trade development’s China and ASEAN.4.Benefits both parties gaining from the promotion of free trade facilitation.5.How to overcome various internal and external uncertainties and how to develop the upgraded free trade agreement version in the future.And according to the following logic to elaborate:First of all,by analyzing related historical literature,this paper summarizes the relevant research on China-ASEAN Free Trade Area and the actual situation of the development of the Free Trade Area.Moreover,this paper expounds the development process of China-ASEAN free trade foundation since the early stage of development to the full completion of the free trade area.Also,it gives detailed explanations of the Free Trade Agreement main subjects.Furthermore,based on theoretical and practical analysis,this paper elaborates the formation of the upgraded Free Trade Agreement,the impact of the strategy of free trade area between China and ASEAN on bilateral economic and trade cooperation,and points out various possible challenges and uncertainties in future cooperation.Additionally,we analyze both parties’ impacts and trade changes on goods after upgrading.Then,we subdivide the competitiveness and complementarity of China and ASEAN in various products by using 2 models as Gravity and GTAP.The Gravity model of Trade empirically focuses on testing the trade effects of China-ASEAN Free Trade Area.While the GTAP model is used to not only simulate and predict the changes of macro-economy,trade and welfare level amongst China,ASEAN and China’s main trading partners but also the trade outputs in numerous countries after fully implementing the upgraded version.In addition,the impact of CPTPP entry into force is also set.Finally,based on the above analysis,put-forward policy recommendations for the future upgraded version of the China-ASEAN Free Trade Area promote the full realization of the liberalization of the China-ASEAN Free Trade Area and provide a reference for the foundation of the community’s destiny.The main conclusions of this paper can be summarized as the following points:First,According to current situation and effects from the Free Trade Area development process,the cooperation in Free Trade Area has played an important role in the economy and trade development between China and ASEAN.The scale of bilateral trade has been escalating,and the growth rate of bilateral trade is higher than the growth rate of their respective foreign trade.Even though the scale of bilateral trade compared to the proportion of the total foreign trade volume increases,trade balance between two parties are still imbalance.Owing to the development of the Free Trade Area,Exports from China to ASEAN tends to be targeting on industrial products While China’s imports from ASEAN tends to base on primary products.This is consistent with the results of the China-ASEAN Revealed Comparative Advantage Index and the Trade Complementarity Index indicating that there is a complementary relationship between China and ASEAN in all kinds of trade products.Yet in some products,the competitive relationship between the two parties still exist this competitive relationship.To sum up,the empirical results of trade gravity model show that the establishment of China-ASEAN Free Trade Area has played an important role in the growth of trade volume between China and ASEAN indicating that the foundation of free trade area has brought positive trade effects to China and ASEAN.Secondly based on the trade effects from the future upgraded version perspective,the simulation results as per GTAP model show that the upgraded version of China-ASEAN Free Trade Area has significantly promoted the economic growth and welfare level of China and ASEAN countries after its complete implementation.The upgraded version has positive impacts on the growth of import and export trade between the two parties.It also improves the terms of trade between China and most ASEAN countries.On the other hand,the deterioration of the trade balance has occurred in all member countries except Singapore.At the industrial level,the growth of product output,import and export trade volumes in various industries both China and ASEAN has increased significantly,and the trade balance has been improved,mainly focusing on products with comparative advantages to both parties.On the contrary,product output and trade are affected by the industry,to countries which has relatively disadvantaged products.On the premise of the full implementation of the upgraded version,the negative impact of the establishment of CPTPP on the economic and trade growth of China and ASEAN is not obvious,demonstrating that the promotion of trade liberalization between the two parties can prevent the impact outside the region to a certain extent.Despite this,some members were affected by the domestic industry,which led to the deterioration of their terms of trade.At the same time,it also brings different degrees of negative impact on the economy and trade of non-members outside the region.Thirdly,the future development of China-ASEAN cooperation in the free trade area is still facing a complicated internal and external environment.Both parties should accelerate the implementation of the upgraded version and improve the content.Increasing the coordination,alignings of the development strategies of the two parties and promoting the ―Belt and Road‖ Initiative and Construction of the ASEAN Community ―ASEAN Economic Community Blueprint 2025‖,will break the constraints of economic development in ASEAN countries,Constantly they will wildly strengthen bilateral economy and trade cooperation scale,political mutual trust,and increase social,cultural and civil exchanges among countries in the region as well as establish the secretariat of China-ASEAN Free Trade Area to ensure the stability,health and sustainable development of the upgraded version of the China-ASEAN Free Trade Area in the future.