Research On The Influence Of China-Korea FTA-ROO On Bilateral Trade

Since the establishment of diplomatic relations between China and Korea in 1992,the economic and bilateral trade development between the two countries relations have been expanding.In particular,the China-Korea Free Trade Agreement,which implemented on December 20,2015,has promoted the development of trade liberalization and investment facilitation.Besides,it set a good example and a positive demonstration effect on accelerating the process of economic integration in East Asia and the Asia Pacific region.However,relevant researches shows that as an important part of CKFTA,the Rules of Origin(ROO)can effectively protect the interests of the countries and prevent the occurrence of trade deflection.But it can also affect the development of bilateral trade and the implementation effect of FTA.Studying the impact of CKFTA-ROO on bilateral trade will widen the road of trade liberalization,so that China and Korea can better adapt to the provisions of ROO in the future economic and trade cooperation.At the same time,it will also enable China to have a more comprehensive consideration on the terms of the ROO when signing FTA in the future,and promote the freedom of international trade development.The purpose of this paper is to study the CKFTA-ROO and its influence on bilateral trade.First of all,by analyzing the fact characteristics of bilateral trade and CKFTA-ROO,we can get the structure characteristics of bilateral trade and the distribution characteristics of rules of origin applicable to different types of products.Secondly,we analyzed the impact of ROO on bilateral trade theoretically.Based on the seven point system,the ROO is quantitatively studied and the restrictiveness index of industry is calculated.It is found that the industry with the highest degree of restriction is the agricultural and food processing industry,while the industry with the lowest degree is the general and special equipment manufacturing industry.Then,we use the gravity model to conduct an empirical study on the impact of CKFTA-ROO on bilateral trade.By selecting the bilateral trade data of HS six digit coded products in 2011-2018 and analyzing the relationship between the import and export 5205 products and the ROO restrictiveness index,we found that there is a significant negative correlation between CKFTA-ROO and bilateral trade.Rules of origin will have a restrictive effect on bilateral trade between the two countries in the short term.In addition,we uses the PPML model under the fixed effect to test the robustness.At last,we come to conclusions and put forward some suggestions on the formulation and adjustment of ROO,so as to make the ROO more appropriate and promote the development of international trade.