Research On Trade Potentialities Of China-EEU FTA

The gradual implementation of “The Belt and Road" strategy is benefit for China to expand energy cooperation and capacity channels in providing potential protection.The Eurasian Economic Union(EEU)has coincidence with China in the geopolitical security and are seeking opportunity of development under a large demand for infrastructure,and the corporation between China and EEU is likely to tilt from strategic interests to trade,so Chinese and the Eurasian Economic Union has the possibility of establishing a free trade zone.In this paper,gravity model is needed to get the conclusion that China and the Eurasian Economic Union has great trade potential.And then,using the GTAP simulation could get the results of economic effect and industry effect.based on Chinese and the Eurasian Economic Union established FTA.And FTA is beneficial for the improvement of the output,in addition,it also has a positive effect on China in economic welfare effect,but economies scale and trade structure are different,and their impact on the industry also have differences.The simulation results show that the China obtained economic welfare is 6 times of the EEU,the change rate of trade terms are on the contrary,In order to achieve win-win,China could transfer part of economic welfare to the Eurasian Economic Union especially those weak members,in order to balance the economic interests of both sides,on the other hand,China could help the Eurasian Economic Union by using the scale of economy effect to reduce its costs,so that they could continue to corporate well.The implementation of the FTA in the industry effect is highly complementary,paying attention to their output of related industry when the comparative advantage industries entering the domestic market is critical.In the negotiation process of the FTA,the two sides should open free market as soon as possible to promote fair competition atmosphere,and it is necessary to set the appropriate tariff to protect weak industries,promote comparative innovation advantage and at last,promote the tariff be zero to corporate better.In addition,the simulation results also show that the establishment of FTA has the impact on the terms of trade in other regions of the world and if the U.S.A economy faces bad situation because of the FTA,the United States would take some measures such as the establishment of other bilateral or multilateral FTA to weaken the impact.The world economic situation is also facing greater uncertainty with being the power of Present Trump.Under this background,China should active quickly to obtain information and seeking dominant position,for example,establish multilateral FTA.