Analysis Of The Construction Of China-Japan-South Korea Free Trade Area

Nowadays, ‘Peace and Development’ is the topic of the era. With the further development of the technology of science technology and internet, the economy cooperate between different counties has been much more frequent and closer. However, since the number of the member in WTO has been increased gradually these years, the conflicts between WTO members become more difficult to coordinate which can be proved by the long-lasting Doha Round negotiations. Under this background, more and more countries have chosen to jump out of the WTO and negotiate free trade agreement with their neighbors to boost the economy of the entire region. Both the North American Free Trade Agreement(NAFTA) and the European Union have achieved great success, but as the three of the biggest economy entities, China Japan and South Korea have very close relationships in both economy and international trades, but the progress of the "China-Japan-North Korea Free Trade Area" negotiation is rather slow compared with other areas.This thesis will start with the reality basis of economy of the three countries, such as the international trade status,tariff levels, etc. By analyzing specific numbers, we’ll find out the comparative advantages of each country, and we with analyze the economic basis of founding the free trade zone by calculating the trade complementary index and other statistics. On the basis of this, we’ll discuss the economic effects brought by the establishment of the free trade agreement. In this part, we’ll study these effects from two aspects, the Trade Creation Effect and the Trade Diversion Effect and we also analyze the effect for the enterprise from the view of firm heterogeneity. Finally, we will analyze the difficulties and obstacles of the establishment of the free trade area from the economic and non-economic visions in order to find a solution to promote the regional economic cooperation.