A Theoretical And Empirical Study Of American Strategy Of Free Trade Agreement

As one of the most important trends of nowaday global economy, regional economic integration has gone through three waves. A new wave which originates in the early 1990s is coming together with the economic globalization, and it presents several new traits. For example, the bilateral free trade agreement (FTA) is regarded as the leading form of regional trade arrangements, and now it covers more business areas. The other remarkable trait is that the US-led great powers change their indifferent attitude to an active one towards the bilateral/regional free trade agreement under the background of repeatedly frustration of multilateral trade framework. They have joined in the regional economic cooperation and promoted it greatly, which arouses much attention. The readjustment of American strategy of free trade agreement has already generated a considerable impact on China.Theoretical and empirical methodologies are used to analyze the motivation of the readjustment of American strategy of free trade agreement and the readjustment's impact on China. After that, Chinese coping strategy is presented. With the reference to the new regionalism, a mathematical model based on Freund's "three-oligopoly" model is applied to compare the differences of these countries' benefits in multilateral trade system and those in free trade area, in order to discuss each country's, especially great power's motivation to sign up the free trade agreement. Based on the theory of customs union, the paper integrates Gravity Model and Anti-factual Estimation to do an empirical investigation on the implementation effect of American strategy of free trade agreement.After the theoretical and empirical research on American strategy of free trade agreement, the paper comes to the conclusion that every country now has an enthusiasm to sign up the free trade agreement, in the presence of deepening multilateral trade system and declining tariff level. American strategy of free trade agreement brings to itself a positive trade creation effect as well as little trade diversion effect. Besides the economic benefits, the cooperation with small nations benefits America in other aspects, such as the unilateral payment from small states, and the bargaining counter of the negotiation with non-member countries. Moreover, it will help America to hold a dominant power of controlling international economic rules to achieve American political and security interests. American strategy of free trade agreement not only exposes china to the loss brought by the consequential trade diversion effect, but also threatens Chinese regional integration strategy. On one hand, China should enhance the competitive power of export commodities, improve export commodities' structure to reduce the trade diversion effect. On the other hand, China should establish a China-centered regional integration network by learning from American strategy of free trade agreement, and search the opportunity of cooperation with America.