Research On The Implications Of A CJK FTA To China's Automobile Industry And Countermeasures

Since the 1990s, regionalism developed vigorously in the world. Under the WTO multilateral trade system, many countries begin to participate in regional trade agreement actively. FTA is one of the main forms of regionalism and it is the most usual form when countries join regional economic integration. According to the WTO statistics, until July 1st,2007, the number of FTA which has already entered into force substantially in the world wide amounted to 143 and 76 of them took effect after the 2000. The trade activities among FTA members approximately accounted for half of the global trade volume. Now, The European Union (EU) and the North America Free Trade Area (NAFTA) are the most influential regional economic integral organizations in the world. Compared with the European and American areas, the regionalism practice of Asian is slow. Now, there is only one regional economic alliance- ASEAN in the Southeast Asia, while there is no region-wide regional trade agreement in Northeast Asia, the main form of cooperation still rests on functional economic integration and lacks of further institutionalized cooperation to enhance the economic integration of Asia. China, Japan and Korea are three major Northeast Asian countries; further economic cooperation among them would be the key of Asian economic integration. Statistics shows that the combined GDP of China, Japan and Korea account for 50% of the world total volume and the population of the three countries amount to 1.5 billion, as a result of this, CJK FTA would make itself the third largest economic blocs in the world following the EU and NAFTA. Now, CJK FTA is just in the phase of research, however, three countries are engaged in facilitating to CJK FTA all the time. In 1999, the leaders of China, Japan and Korea decided to begin joint research about CJK FTA.Accordingly, joint research on the feasibility and economic effects of CJK FTA has been undertaken by the Development Research Center of the State Council (DRC) of China, the National Institute for Research Advancement (NIRA) of Japan and the Korea Institute for International Economic Policy (KIEP) since 2001. In May of this year, after China, Japan and Korea Summit Meeting, the prime minister Wen Jiabao of the China State Council announced that China, Japan and Korea will finish CJK FTA joint research this year and start up CJK FTA negotiation in 2012.Under this background, from the perspective of effects brought by CJK FTA to automobile industry, the essay introduces the challenges and opportunities our automobile industry will met then, and as for these effects, it put forward some suggestions.The full text is divided into four chapters:Chapterâ… , Introduction. This part of the paper introduces the background of the selection of the subject and the significance, the main framework of the paper and methodologies, innovations and shortcomings, etc.Chapterâ…¡, Current situation of automobile trade among CJK. The first part of this chapter describes the current status of China's automobile industry and concludes that China is the largest automobile producer, but not a strong automobile country. The second part shows the current situation of China-Japan automobile trade and China-Korea automobile trade and the result shows that China has great trade deficit in this field with Japan and Korea. The last part analyzes the comparative competitiveness of automobile industries of China, Japan and Korea using RCA Index and TC Index. The statistics shows that China's competitiveness is quite low compared with Japan and Korea.Chapterâ…¢, Effects of CJK FTA to China's automobile industry. This chapter introduces the concept of FTA first and then analyzes effects of CJK FTA to our automobile industry from the aspects of'Static Effects'and'Dynamic Effects'of CJK FTA, including'Trade Creation', 'Trade Diversion' and 'Investment Promotion', together with'Competitiveness Promotion','Scale Economies Effect' and'Technology Innovation'.Chapterâ…£, Countermeasures and Suggestions. Under the background of CJK FTA, I proposed some suggestions to protect and facilitate our country's automobile industry development. Firstly, it refers to that we should make parts of our automobile products as sensitive product and make a transition period arrangement during the process of FTA negotiation. Secondly, facing with the challenges and opportunities of CJK FTA, automobile industry should insist to proprietary brand and we should develop our automobile industry by our domestic enterprises. At last, I recommend that we should facilitate the development of our auto parts industry to better utilize the economic complementary of China, Japan and Korea and we should promote the technology innovation in the auto parts industry.