Study Of FTA Between China And South Korea

The financial crisis has caused a worldwide continuous desend of economic demand.World trade is heavily attacked and the economic is facing a situation of stagnation.For their own industrial benifit all governments take measures of trade protectionism,which is now showing a global aggravation.Promoting FTA is a good solution to stop the aggravation and reduce the loss caused by the desend of the international trade.Concluding FTA with other countries can enlarge the transactionand the trading volume and then improve the trade liberalization by revoke the tariff and weaken non-tariff barrier.Since Korea is a country that its very big part of national economy is trade.Korea should take more consideration on promoting FTA,and its first object shoud beChina.Because China is closer to Korea geographly,historically and liturally than any other country.Also China is the biggest trading and investing country of Korea.Chapter 2 analysis the necessity of Korea-China FTA.Since Korea and China established diplomatic relations,the achievement is outstanding in the fields of politic,economic,diplomacy,culture and so on. The two countris has been through the neighborliness friendly relations,cooperation partnership and omnidirectional cooperation partnership.In May of2008,they arrived strategy partnership during the head interview.While the development of economics leap forword,the dependence of trade is rapidly deepening.Meanwhile,trade friction and dissension relating to direct investment is increasing.Those could be soluted by institutional arrangement such as FTA.Korea can comply China with positively promoting FTA,so that conclude Korea-China FTA as soon as possible and march to areas like central asia by taking China as a bridgehead to gain comprehensive national interests.Also Korea-China FTA has realistic feasibility.First,political relation's development offers political guarantee.Second,economic complementarity is its base.Complementarity is the biggest feature of Korea-China economic cooperation.It benifits both side.Korea and China is in a trade relationship of both competation and cooperation.However,cooperation is more important.Third,the intercommunity of culture of Korea and China is the mechanism of FTA's effect growth. In chapterⅢ,process and problems of FTA between South Korea and China are analyzed.In the process point of view,firstly,the joint research of China-South Korea's FTA goes well;secondly,governments of China and South Korea take the positive attitude towards FTA,in the process of the joint research about FTA,both governments put great emphasis on the promotion of friendly political relations and economic cooperation;thirdly,China-South Korea's FTA is strongly supported by the industries of China and South Korea,the industries welcome the FTA.Even though,many problems need to be solved in the process of promoting the FTA.Continuing trade imbalance should be the first problem,due to the difference of the level of ecnomic development and trade commodity structure between South Korea and China,China is in the trend of exaggerating the unfavorable balance of trade. The trade deficitof China to Korea is enlarging since establishing diplomatic relation.This is closely related to the constraint of Korean government sets for foreign farm produce and the government used nontariff measure frequently such as anti-dumping, it embarrassed Chinese farm produce enter into the Korean market. The large trade deficit is the greatest outstanding problem between the economic and trade cooperation of Chinaand Korea. The enormous trade deficit of China is the most outstanding problem in the trade cooperation between Korea and China.So since the trade imbalance is difficult to solve in a minute,Korea-China FTA will inevitably encounter obstacles,for which should be prepared by both side.Second,impact on industries and trade protection.The trade deficit of China to Korea is caused mostly by heavy chemical industry and high-tech industry's lacking of international competitiveness.Also China's investment liberalization and intellectual property protection is in a passive position.Korea-China FTA will bring impact to Chinese agricultural and manufacturing.Korea has comparative advantage in manufactured goods while China in agricultural.Because of the industrial development level and resource endowment of Korea and China,agricultural trade liberalization will benifit China more,however,Korea is more competitive in industry,especially in manufacturing.Thirdly,the technology gap between Korea and China and so-called deindustrialization of Korea.With the big increase of Korean manufacturing enterprises' overseas investment especially towards China,Korea's point of view about the bilateral investment of Korea and China shows a dual character.On one hand,Korea is worrying that its deindustrialization can cause a deterioration of enployment environment and bad effect on economic growing potential.On the other hand,while Korean enterprises invest in China and Chinese enterprises purchase Korean enterprises,Korea is worrying about its technology out releasing and the weakeningof technology advantage and competitiveness caused by that.Fourthly,there are lots of disagreements between Korea and China on such as howFTA reduce and abolish tariff,trade rules and service trade liberalization.Chapter 4 study the countermeasure of speeding Korea-China FTA.First,we should strengthen friendly relations and create harmonious atmosphere.On the basis of the two countries' leaders' accessing each other and intercoursing frequently,we can create harmonious and friendly atmosphere for the future's negotiation and joint research on Korea-China FTA.Second,we should establish common target. Korea-China FTA is extremely urgent.Both side should look forward positively to end the joint research on Korea-China FTA,start the negotiation and come to an agreement as soon as possible.Third,Korea and China should consider each other,concede to each other and make it step by step,especially when facing sensitive problems of Korea-China FTA.