The Study On The Trade Effect Of Cafta

On November 4th, 2002, the leaders of China and ASEAN signed an agreement, which was called Framework Agreement on Comprehensive Economic Co-operation between the Association of Southeast Asian Nations and the People's Republic of China. It shows the formal beginning of CAFTA. CAFTA is the third biggest free trade area all over the world, which is established after EU and NAFTA. CAFTA will not only affect the future development of the economics and trade between China and ASEAN, but also promote the integration of North Asia. CAFTA is of significance to the world. Therefore, the people from all walks of life around the world have paid much attention after it was found.Starting from the background of CAFTA and combined with its proceeding and present situation, the thesis makes empirical analysis by using the gravity model and does research on the trade effect of CAFTA. Firstly, based on summarizing the related theories and researches about CAFTA, the thesis reviews the development of CAFTA, studies the reason of its establishment and lists its framework. Secondly, by analyzing the present trade situation, the thesis observes each country's economic situation and its trade status on the world, the relationship between China and ASEAN, and the competitive trade effect and the complementary trade effect of CAFTA. The result indicates that the relationship between China and ASEAN is getting closer, and they trade competitively in manufactured goods classified by materials, machinery and transport equipment, trade complementarily in textile, consumer electronic product and electronic component. In the part of empirical analysis, the gravity model is used in quantitative analysis of China-ASEAN trade, in order to discuss the decisive factors of the trade between China and ASEAN. The conclusion is that the establishment of CAFTA has trade creating effect on the export and import between China and ASEAN, but the effect on China's import from ASEAN is more than China's export to ASEAN. Finally, the conclusions of the paper are drawn and related suggestions are put forward about how to enforce the trade cooperation between China and ASEAN.