Research On The Trade Potential Of Sino-Korea Agricultural Products

In recent years, foreign trade between China and Korea has developed very rapidly with competitive power reinforced in the global market, more market shares occupied, and agricultural products interaction between two countries more frequently. The geographic and humanity elements of Korea have determined the hysteretic nature of agriculture development. Compared with other development fields, agriculture in Korea is in a weak position and agricultural products are mainly dependent on imports. China is the main importer of agricultural products from Korea. In recent years, the trade volume has been in a down trend but still having some influence and impact force into Chinese agricultural products market. Although the growth rate has changed, in a whole, trade of agricultural products between two countries is inclining to be reasonable since favorable balance of trade in a high value will stimulate Korean government to take custom duties or use non-tariff barrier to protect the domestic agricultural products market. So only to keep the favorable balances within a reasonable range can agricultural trade between two countries have a huge increasing space.After entering into 21st century, China and South Korea started discussing to establish China-Korea FTA. For the realization of China-Korea FTA as early as possible, two countries have gradually lowered various custom duties and reduced trade barriers, and then trade of inter-local agricultural products has boomed up. However, due to cultural difference, political background, and problems left over by history have caused many disagreements during the trade of agricultural products. After up to eleven years’ non-governmental joint research period and university-industry-government joint research period, and 14 rounds negotiation lasting two years, in June 1st 2015, China and South Korea officially signed the free trade agreement to start China-Korea FTA which so far covers widest areas with the biggest national trade volume involved in China. After the implementation of China-Korea FTA, with custom duties in two countries lowered to zero, more potential will be released in trade of agricultural products of two countries. Therefore there is huge practical significance to study Sino-Korea trade of agricultural products.The author mainly studies the potential in Sino-Korea trade of agricultural products. Firstly illustrate the history and current situation of Sino-Korea trade of agricultural products on the theory basis, and then focus on discussing the development process, characteristics, trade structure, competitiveness and complementarity of Sino-Korea trade of agricultural products. Next use the trade gravity model to make empirical analysis on the potential in Sino-Korea trade of agricultural products and then make a prediction according to the analysis result. In the end, based on above researches and analysis, the author puts forward relevant policies and proposals on how to vigorously promote Sino-Korea trade of agricultural products and how to promote Chinese agricultural development from Chinese side.The author finds out from competitiveness and complementarity of Sino-Korea trade of agricultural products that, China has stronger international competitiveness and comparative advantages than Korea in many classes of agricultural products. China has especially strong competitive edge in five classes:class 04 (cereal and cereal manufactured goods), class 08 (animal feed), class 21 (fur, epidermis and fur raw material), class 22 (petroleum seed and oil bearing fruit), and class 25 (pulp and waste paper). But there in the whole presents a general competitive edge or a week competitive edge in Korea-to China related agricultural products. Analyzing from the complementarity in agricultural products of China and South Korea, it mainly concentrates on aquatic products, cereal and cereal manufactured goods, textile fiber and animal and plant materials.Solid evidence from trade gravity model shows that, there presents a directional change trend between the trade of agricultural products and value of import and export goods but there is little influence generally. However, there shows a positive influence relation between the gross population and per capita income in China and South Korea with big effect degrees. The author predicts that after the implementation of China-Korea FTA, with custom duties in two countries lowered to zero, more potential will be released in trade of agricultural products of two countries. Based on the analysis on status quo and empirical analysis result, for promoting Sino-Korea trade of agricultural products, governments from two countries should firstly create a stable marketing environment and political background for the trade of agricultural products. Secondly trade consensus should be achieved. Thirdly strengthen the pertinence and aim of negotiations. From the industry level, firstly strengthen the agricultural cooperation. Secondly improve product quality and marketing recognition. From Chinese side for promoting Chinese agricultural development, firstly change current agricultural production pattern. Secondly introduce advanced agricultural production technologies and process. Thirdly, consummate the production structure. Fourthly, promote bilateral trade cooperation and communication. Fifthly, expedite the step of liberalization of agricultural trade.