Research On Economic And Trade Effects Of Establishing Sino-Korea Free Trade Zone In Agriculture

With the rapid development of economic globalization and regional economic integration, the economic of most countries are becoming more cooperation and integrated. The trade becoming more and more integrated between China and Korea. Although the government of China and Korea advance to establish the Sino-Korea Free Trade Area, they have not reached any effective agreement. They all focus on agriculture and manufacturing.Our research is basic on the economic and trade influence after the Agriculture FTA of China and Korea has been set up. Basic on the Customs Union Theories, the FTA welfare Theories, the Intra-industry Trade Theories, We contrast the agriculture trade between China and Korea. Our basic finding is that China's competitiveness in agriculture, the high interdependence of agriculture trade between China and Korea and the upward trend intra-industry trade in the agriculture. Besides the factors of geographic, economy of scale, direct investment, the structure of commodity and so on, are influence the feasibility of Sino-Korea FTA in agriculture. We use two mathematical models to measure the effects of Sino-Korea FTA in agriculture. As a result, macroeconomic effects of a possible free trade agreement between China and Korea in agriculture are likely to be magnified. Meanwhile, it will influence other fields of China and Korea. It promotes not only a short-run economic effect but also a continuous long-run economic growth by promoting Sino-Korea FTA in agriculture.