Comparative Analysis And Entering Strategy Of FTA Between Korea And China On The Service Sector

Since1970s of the20th century, service function which was included in the goods became separated and thus, its value has increased. With the development of information and communication demand and supply of service between the long distance was enabled. This made people to realize the importance of service industry around high added value business such as business service and finance and insurance service. Especially for the developed countries, they have realized that they cannot cut down the cost anymore in manufacturing business due to the development of science technology. Thus, by raising knowledge integration level of service which the labor is the only input, they have taken a strategy to increase productivity. Moreover, with the development of information and communication technology, the cost-saving effect has been gradually maximized.Recently, over the liberalization of goods trade, there has been showing a basis of liberalization of service trade. However, for the service industry, as for its characteristics, it is intangible and very labor intensive. Therefore, it was considered as an industry lowering economic growth with its relatively low productivity compared to manufacturing business. Furthermore, because of its characteristics of intangibility, it is very difficult to digitalize the trade performance and thus in international trade service trade did not get much attention.Meanwhile, Korea and China has been striving to make trade liberalization of service through the local trade agreement which is becoming the world trend for the two countries as well as the new advantage for trade growth. Regarding Korea-China mutual FTA, there has been a research based on the huge national interests. Prior step to completely opening the service industry against the world which is relatively weak compared to manufacturing business, constitution development of service industry through Korea-China mutual service agreement or FTA will be valid as a strategy for the two countries to prepare their future.North East Asia area, including Korea and Japan and China which have become the largest export market for Korea, are evaluated as the power countries to lead future world economy. However, for Korea and China, they have a surplus for goods trade but in contrary to this, they are experiencing a loss for service trade.This research looks into the future direction of service trade for the two countries.