| Nowadays, the contact between countries is more and more frequent in economy and trade area. Readers are familiar with"global economy"and"integration with global economy"which is quoted in lots of magazines and articles. According with the move of global economy, the integration regional economy is the result of the development of the world's economy. Free Trade Area (FTA) as periodical form and arrangement, is adopted by countries in growing numbers which are hope to involve in the global economy and the integration with global economy. Countries get benefits from the arrangement of Free Trade Area continuously. However, countries out of the area are repelled or isolated. So those countries which are out of the area are intend to join in the exist areas or build up new FTA with the countries which are close both in land and economical relation.As two of the biggest developing countries, China's and India's economy are growing sharply, so they were supposed to be the most talent economical system, and be listed in"four gold brick countries". Establish China-India Free Trade Area is not only to catch up with the step of the times, it is a"win-win"choice which is used to help two civilized and ancient countries to develop rapidly together.This article is formed in five parts:Ⅰ. The theoretical summarize of Free Trade AreaAfter the Second World War, there are two import develop trend: Firstly, under the global and multilateral trade system (GATT/WTO), multilateral free trade is expend. After GATT's eight negotiations, the area and territory of multilateral free trade is expend and deepened. Secondly the area trade group whose purpose is profitable trade agreement or arrangement is growing rapidly.Establishing China-India FTA has necessities and possibilities. The necessities include: firstly, wanting to comply with the development of the world's economy, it is a certain trend to organize China-India FTA; secondly, FTA is an effective measure to solve the malicious competitions between China and India. The possibilities include: China and India have harmonious relationship which is the premise condition; the economy of the two countries are growing rapidly is the basic condition; expended trade is a important condition. At the same time, there are also obstacles restrict the organization, including subjective factors: the safe conception"higher polity exceed lower policy"tie up the deepness of India's economical and trade relationship; India's"Chinese Story"is the stumbling stone to build deeper relationship; the perceptive realization in some Chinese is unfavorable to trade. Objective factors: high tax is another obstacle to confine foreign cooperation; press from outside; technical obstacles, etc.Owing to the common benefit and deepened economical support, the establishment of China-India FTA is not"zero-zero play", it is a"win-win"situation. China and India can completely become essential power of the multi-polar world through cooperation and development together.Ⅱ. The relation between China and India, analyze of current situationIndia is making great effort to turn to rapid growth, while this rich is mainly structural which is produce new political challenge. It is probably that China's economy will continue rise into double figures at 2007, which will be the fifth year for the economy to grow into double figures. And this had been proved. The value of bilateral trade developed rapidly these years which is so stimulating. On the whole, since 2000, the value of bilateral trade between China and India doubled 25 times.The aim which is set up by the head of China and India had already been reached. India predict by the year 2010, the value of bilateral trade will pass 40 billion US dollar."Trade rate of combination"is an index to measure the compactness and reliance of the trade relationship. Through computing, on one hand, the index from China to India rises steadily, and under 1 from 1990 to 2002, and then above 1. This tells, before 2002 the trade relation between both sides is not close, the influence and reliance are not obviously. After 2003 the trade connection is closer day by day. On the other hand, the index from India to China fluctuated intensely. But on the whole, the compactness is fundamental similar, the index showed in the earlier year 2002, the trade between China and India is already inseparable.Ⅲ.the original intention of establish China-India FTA and the realistic basis1. Economical factors. In 2007, the value of import and export between China and India is 38.65 billion US dollar, increased by 55.5%, as compared with the same period last year. During the past 10 years, the value of trade increased 15 times, the aim which is to achieve 20 billion US dollar in 2008 by China and India is reached beforehand. China is the second largest trade partner to India, and India is the largest partner to China in South Asia. With mutual benefit economical and trade cooperation, both China and India get real benefits.2. Geography factors. Nai Duila mountain pass used to be the Southern main thoroughfare of"the silk road".3. Political factors. On 13th to 15th January 2008, the premier of India made a state call to China. He pointed out"Wanting to expend trade and investment, creating good trade environment for economical connection, the government of China and India will make great effort together to solve the problems of non-tariff barriers and the protection of intellectual property."A joint working group between China and India which is formed by experts and scholars and officials will organize the initial meeting at the first week of April 2008, the organization of China-India FTA will be discussed there.4. Two countries have obvious complementary space, each has superiorities themselves. Internationally there are lots of scholars called China's peaceful rising pattern as"Chinese manufacture", while called India's pattern as"India service".5. The income and consume of Chinese is similar with Indian, which provide large scope for mutual demand. Both of China and India are developing countries with low per capita income, the residents'consumption is mainly un-durable goods, the consuming structure overlaps largely, all of these provide premise condition for the building of big unit market.IV. The meanings of establish China-India FTA1. Using Trade Diversion and Trade Creation to expend the total sum and scale. Trade Creation means owing to the tariff and the measures which have the same effectiveness with tariff is cancelled within the member countries of integration economy, the mutual scale of trade is in-large, the standard material benefits is increased.2. Effectively develop comparative superiority, make sure resources used appropriate. Letting resources and capital and technology be traded freely within FTA, in this way the unreasonable factors, such as monopoly, can be canceled. Enhance the development of technology and economy. Reduce the reliance of developed countries.3. Stimulate the structure of industry escalate, struggle for the economy to jump up. The chance is objectively China and India is each other's next best foreign destination of industry transform. That is to say, the labor intensive industry and other manufacture are transferred to India, if the condition permits, the industry of software transferred to China.4. Strengthening the cooperation and talk in international affairs between two countries, create conditions for mutual-political belief. In the theory of international relationship, economical relationship deepen the depth of political cooperation, the steady political relation enhance the results of economical cooperation.5. Creating"demonstration effective"to other countries, forming large FTA in South-East Asia. In the past few years, there are a large number of scholars research and discuss the CAFTA, it indicates that not only India, many countries in South-East Asia hoping to establish FTA with China.Ⅴ. The selection of China-India FTA pattern and phase's regulationOn the whole, the process should under the multilateral trade system of WTO, follow the principle: gradually, open, win-win, benefit for developing countries, absorb the novel feather of APEC pattern, and study the developing experience of other FTA.Open several appropriate industry and territory practically.Set up tariff reduce table, lower mutual tariff gradually.Cancel tariff and non-tariff barriers at suitable time.Expend the cooperate territory within the FTA, absorb new members. |
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