The Analysis On The Trade Effects Of CAFTA

The CAFTA has been officially launched since January1,2010. It has been the gigantic economies which include eleven countries and1.9billion people. The GDP of the economies can reach6000billion dollars, in addition, it is the biggest economies among developing countries. The tade model between China and ASEAN countries changed from traditional inter-industry to intra-industry tarde with the trade development, and countries realize complementary for each other. The machinery and electrical products are the major products among bilateral trade, there are competitions as well as cooperations in these products. Therefore, in-depth study of machinery and electrical products trade can make convenient for trade between member countries, and make the research more accurally.The article analyzes the present situation and characters of machinery and electrical products trade in use of official statistical data with the method of theroretical and empirical. Showing the level of competition and cooperation of machinery and electrical products with the use of index of RCA. It also shows the level of intra-industry among different countries by the use of G-L index. At the same time, analyzing the static and dynamic trade effects of CAFTA with the custom union theory. Showing the benefits brought by the convenience of electrical products trade. At the end, the article gives some suggestions on how to promote the machinery and electrical products trade between china and ASEN countries.The conclusion of the article is listed as followed:both China and ASEAN countries have their comparative advantages in machinery and electrical products. China has strong comparative advantages in telecom equipment and electric power, and has disadvantages in hot and cold cathode tube. So they should make complementary for each other to increase the total benefits of the CAFTA. Because of the similar technical level and similar resources, the intra-industry level is very deep. It is well expressed by the office equipment trade between China and Singopore, and telecom equipment trade between China and Malaysia. In addition to that, the establish of CAFTA truly brings trade effects to machinery and electrical products trade, which are direct proportional to GDP, and are inversely proportional to the distance. At the same time, the import promotion brought by the CAFTA is greater than the export promotion. In a word, the construction of CAFTA enlarges trade volumes, increases the investment from other countries outside, and make great contributions to the developments of trade.