Research On The Necessity, Effects And Measures Of Constructing China-Korea FTA

Since the twentieth Century, with the rapid development of the deepening of economic globalization and regional economic integration, it’s that between two or more countries have signed free trade agreements as a way of regional economic cooperation. During the decade of the90’s the WTO replaced the existent GATT, and then more and more nations had signed FTA. Along with the trade globalization the world economy has entered into the FTA era, and many countries around the world hope to establish a free trade zone, Korea and China have also reached customs union relations. But the current level of development of the regional economic integration in Asia is far for being similar to those ones in American NAFTA, and the European economic one. With the continuous development of bilateral economic trade relations, and the rapid development of world economy, as well as regional integration, now free trade in East Asia has also emerged into a phase of rapid development. Korea and China are seeking to have impact on the Northeast Asia countries and Asia itself. So, Both countries have establish a Free trade zone which will have a significant impact on the structure and development of Asian Economy, and at the same time, it will have impact on the world economy. Therefore, it is of great importance not only for the Asian but for the world economy the development of Korea Free Trade Area.From August of1992with the normalization of diplomatic relations between these two countries, both nations have had a considerable development in economic and trade cooperation. The trade development has been particularly growing during the last21st century. The proportion of Korean exports to China had steadily raised, bilateral economic ties between two nations had also reached high levels in terms of quantity and quality. As a result, the volume of trades between Korea and China accounted to the proportion of their total trades is now higher. Thus, with the sign of FTA, industries in both countries could be able to produce more and generate a global effect in the sector.This thesis presents a study of the necessary structure and characteristics for the construction of a FTA, and its influence over the industries of Agriculture, Industrial and Services, which will be used as a base to analyze the effects in the Korean Chinese FTA. The first chapter covers the theory necessary of FTA, which includes:A review of the available literature about regional economic integration, Tax theory, and an overall of related FTA references. The second chapter includes the overview for the development of economic and trade cooperation. It is addressed the volume of trades between the two countries, the two main trade partners, investment status and the main import and export commodities between Korea and China. Third chapter presents an approach for the construction of the FTA. It is explained how political diplomacy and economic cooperation are needed in Northeast Asia to carry out economic and trade aspects. The fourth chapter explains the effect of the FTA in China economy, trade cooperation, and how bilateral free trades will impact over the industry of both countries. The fifth chapter is policy recommendation.