Analysis On Effect Of Sino-Korea FTA Under The Background Of Economical Globalization

Along with the trend of economic globalization, regional economic integration has also been developed rapidly Since the 1990s, many countries take part in the bilateral or multilateral economic cooperation in order to develop themselves. East Asia is one of the regions in the world which has much potential, However, relative to the North American Free Trade Area, the European Union, the regional economic integration process slowly, but has great potential. China and Korea are two countries of great energy. The geographic proximity of China and Korea allows trade and economic cooperation to have special comparative advantages. In recent years, as the economic and trade relations between the two countries have become closer, the voices of accelerating regional cooperation continue to emerge. In this context, during the 2004 APEC meeting, Chinese President Hu Jintao and Korean President Roh Moo-hyun announced a economic and trade joint research together, and in March 2005, China's State Council Development Research Center, and the Republic of Korea Institute for International Economic Policy begin the implementation of a feasibility study. The facts have proven that establishing Sino-Korea Free Trade Area keeps pace with the great world trend and is accepted and supported by governments, industries, scholars and most of the people of the two countries, and it certainly will bring great, profound and lasting influences to China and Korea, as well as the regional economy cooperation and the development of the whole East Asia. The establishment of the Sino-Korea Free Trade Area would definitely promote the economic growth of the both sides, and would also make a tremendous contribution to a unified market.Therefore, the establishing of Sino-Korea Free Trade Agreement has a very important significance to China, and it will have a huge impact on China.Based on the Customs Union Theories, Free Trade Area Theories, as well as other relevant International Economic Theories, by means of qualitative analysis and quantitative analysis, historical analysis, comparison analysis and some other studying methods, this thesis analysis the realistic basis of the establishment of Sino-Korea Free Trade Area and focuses on the trade effect of it, then the thesis provides some countermeasures.The thesis has 6 chapters as follows:In chapter1, the thesis introduces the background of this research. A review of related studies abroad and home, the research approaches and methods, the innovation and the shortage of this thesis are introduced.In chapter2, some related theories are discussed, including the Customs Union Theories, the Free Trade Area Theories and some other related theories of international trade, and they form theoretical foundation for the following study.In chapter 3, the thesis analysis the realistic basis of the establishment of Sino-Korea Free Trade Area. From bilateral trade, investment point of view of the two countries, this section sums up the whole trends of economic and trade situation from the establishment of diplomatic relations, and reveals the increasing complementarity in Sino-Korea Free Trade Area. And there is still immense potential in economic cooperation between the two countries. Then, we get the conclusion that there is a solid realistic foundation in establishing Sino-Korea Free Trade Area.Chapter 4 is the key of this thesis. It analysis,after the establishment, how the Sino-Korea Free Trade Area will influence economic and trade of two countries from the static and dynamic aspects. The static aspect which includes the Trade Creation Effect and Trade Diversion Effect is called Static Effect, and the dynamic aspect which include the Investment Effect, Competition Effect and the Effect of Scale Economy is called Dynamic Effect. The establishing of Sino-Korea Free Trade Area will improve the welfare of two countries, and the trade and the investment will develop better. Meanwhile, this chapter is a brief analysis of the establishment of Sino-South Korea free trade area to the adverse impact of China.Chapter 5 provides the countermeasures for China, giving the advice of how to develop the Intra-Industry of China, how to reduce the trade deficit, how to open up sensitive industries, how to develop the investment and how to strengthen the cooperation and communication between China and Korea.Chapter 6 is the conclusion of the whole thesis. Based on the former scholars, the thesis has several innovation: First of all, almost all of the study on Sino-Korea Free Trade Area focuses on the necessity and the feasibility of its establishment. Based on the related theory, the thesis analysis the economic effect of Sino-Korea Free Trade Area roundly from static aspect and dynamic aspect. Secondly, The thesis uses the qualitative and quantitative method to analysis the static economic effect, and as a more convincing results, the thesis also uses partial equilibrium to calculate the Trade Creation Effect of China and Korea. Thirdly, in order to achieve the theoretical innovation in the application, the research based on the Theory of Free Trade Area. And lastly, on the basis of extensive investigations, through the development of the bilateral trade between China and South Korea, as well as the challenges of the establishment of the Sino-Korea Free Trade Area, the thesis proposes solutions to these problems, the countermeasures to the establishment of Sino-South Korea free trade area, and strengthening cooperation Suggestions.