Dynamic Research On FTA's Unilateral Effect Under The WTO Framework

On July 24^th, 2006, 6 key members U.S.A., European Union, Japan, Australia, Brazil and India of World Trade. Organization finished the two - day talks at ministerial level. Since difference is too difficult to make up, WTO Director-General Lamy announced, discontinued the round negotiation of Doha Round indefinitely. Meanwhile in the worldwide the regional trade integration organization has increased rapidly, that has notified WTO and implemented formally. In recent years, because of the old complaint left by Uruguay Round negotiation, a lot of countries turn the demand goal from trade interests to regional trade integration. Comparatively speaking, the regional trade integration of development of China lags behind relatively. Among 197 regional trade agreements already implemented under the WTO framework, there are only 6 RTA notified by China, which accounts for 3% of the total proportion; but according to the recent state of development, China will probably become important motive force of development of regional trade under the WTO framework rapidly in a short time. On the basis of implementing a series of regional trade agreements in recent years, China is carrying on the negotiation of FTA with Australia and New Zealand.Since the 1990s, China - Australia's bilateral goods trade demonstrated the trend increased fast and steadily, the annual average speed of growth is above 15%. Australia has already become the 9th largest goods trading partner of China; China has already become the 2nd largest goods trading partner of Australia instead of U.S.A., second only to Japan. In the bilateral trades of two countries, Australia mainly exports the resource-intensive product to China, such as the mineral products, agricultural products; In addition, Australia exports the high added value manufactured goods to China too. China mainly exports the labor-intensive manufactured goods to Australia. Obvious complement appears in trade of two countries. Annual average speed of growth of China - New Zealand trade is 12.9%. China is second only to Australia, U.S.A., Japan at present, is the 4th largest goods trading partner of New Zealand. New Zealand mainly exports agricultural and forestry products to China. Agricultural products take major ratio of exportation to China among them, the dairy products have taken the great proportion in the export of agricultural products. On the other hand, New Zealand continues to increase the import from China by a large extent, New Zealand mainly imports textile and machinery from China that have the competitive advantage. The trade of two countries demonstrates the obvious complementary characteristic too.During the evolution of FTA under the WTO framework at present, it demonstrates: When a country concludes the regional trade agreement with the multinational (Hub-and-Spoke System); In constant enlargement of FTA, more and more countries choose to join the FTA, which lead to the Domino Effect of FTA. Because of the development of Hub-and-Spoke System, the current FTA pattern in the worldwide is described as the Spaghetti-Bowl Phenomenon. As to this new problem, the traditional analytical method not only unable to make the directionality change of the whole macro change, but also unable to evaluate the gain and loss of some trade or products department; Traditional quantity analytical method can make a general analysis on relative change of comparative advantage of some product or the change direction of the volume of bilateral trade, but can not obtain the effective analysis of the balanced system change either.The research to FTA: The classical theory has presented "trade creation" and "trade diversion" effects, but the influence on host countries in the free trade area and countries and regions outside the area is unknown; Meade model provides under the totally elastic states of offering curve of the other areas outside the area, the free trade area will make a country benefited and another country damaged. Increase and decrease discussion of state in FTA has become meaningless in front of the fast expand of FTA in global wide, and the political economy normal form represented by Grossman-Helpman analysis framework begins to yield unusually brilliant results at this moment. Throughout the analysis on domestic politics persuade interests group, we can obtain the inner political economic reason of FTA fast expands. Furthermore, the analysis on FTA lays particular emphasis on the final relation between development of FTA and WTO, but the two kinds of main arguments are quite different: One think, dominoes effect brought by constant expansion of FTA can realize optimum economic situation under the world complete free trade; Levy is promoting the FTA expansion and incompatibility of MTN based on the median vote principle in China.On the basis of this theory I have used the newest GTAP₆ database upgraded edition, this database includes the Doha round simulation scenarios of WTO on the foundations of GTAP₆ databases; And further adopt Holt-Winters to extrapolate predicting the method makes prediction to external macro changes such as GDP, population, etc.; And then improve the limitation of the general equilibrium model under comparatively static terms in the way of dynamic recursive. Through model analyze China, Australia, New Zealand about several possible policy consequence that bring to set up free trade area, and make analysis and judge to the other areas outside various countries and area one by one. I have proved it at first in FTA negotiation such as Hub-and-Spoke through imitating the result, in Hub status have more apt to make economy improve countries; Having proved it in this course at the same time, the economic reason of existing "dominoe" effect of FTA; The further discovery proved no existed improvement of the original second excellent state in the dynamic course. And obtain it in FTA course of more than one pair such as Hub-and-Spoke; there are obvious trade and economic spillover effect between the countries in Spoke.Because of the limitations of materials, time and research ability, this research needs further improvement as following. Firstly fail to consider the influence brought by the change of capital accumulation in design of the model, so it has a certain impact on prediction precision of the model; Secondly there is partial lack of the basic data when the data are extrapolated and predicted, so use technical packing or assumption; And fail to judge the incompatibility of FTA and WTO, which needs further study.