The Study On The Expect Of FTA's Effect Of Trade And Economic Between Korea And China

The world economic integration has promoted the process of regional economic integration. With trade liberalization and the advance of foreign direct investment, the world and regional economic integration has also been off the climax. Most of the world trade occurs within the regional economy. With the background of export-oriented trade and greatly contribution to domestic economic growth of Korea, it is important to adapt to this trend, through the establishment of a free trade area to strengthen regional economic integration process, thus further increasing the trade in overseas markets.This paper argues that:the biggest motivation of FTA is the pursuit of profit maximum. Economic and trade relations have developed since South Korea and China established diplomatic relations in 1992,, at present, China has become Korea's largest trading partner, and South Korea are increasingly high dependence on trade with China. With China's rapid economic development, increasing the volume of trade between Korea and China, then establishing FTA is the main measures of regional economic integration.This paper analyzes the reason why the establishment of FTA agreements have been able to achieve Korea's trade promotion, mainly due to FTA Member can have the States duty-free or low-tariff trade, Member States can play their respective comparative advantages, and thus enjoy the division of labor benefits and lower import prices and increase consumer welfare in the Member States to increase the economic interests of Member States. FTA agreement between Korea and China, no doubt to ensure that the Chinese market has great potential to increase the demand for Korean products and to eliminate trade friction with each other, inhibit the protection of unilateral trade measures.This paper demonstrates that, on the one hand it is necessary to propose FTA trend, namely through the FTA to maximize mutual economic interests; On the other hand, we must also consider the tremendous negative impact that FTA may bring. Therefore, to establish FTA between Korea and China, Korea should grasp the sensitivity of each industry to predict the possible impact and prepare corresponding coping.In this paper, we discuss the main problems of FTA and the economic effects of economic fluctuations from the main dispute sector between the two countries, and then expect the economic effect of FTA through gravity model of trade. This paper provides some reasonable proposals for the establishment of regional economic integration for South Korea.