The Impacts And Effects Of KORUS FTA

South Korea is a strategic ally of the US in Asia, and both nations are also increasingly close trade partners. Although in2007the two countries had signed the Korea-US Free Trade Agreement (KORUS FTA). but this free trade agreement has been delayed in approval by the US Congress. Until the G20summit in Seoul in late2010, the two governments resumed negotiating KORUS FTA. Finally, the revised US-Korea Free Trade Agreement got congressional approval from both sides in late2011. Then KORUS FTA came into effect on March15,2012. KORUS FTA is recognized as the largest free trade agreement for the United States since the signing of the North American Free Trade Agreement (NAFTA), with self-evident economic and political expectations. Through KORUS FTA. US laid the basis for its return to Asia, strengthen its geopolitical influence in Northeast Asia. For South Korea, the deepening of cooperative relations with the United States undoubtedly adds chips to regional security and economic development. With the various preferential treatments in KORUS FTA. the Korean products will become more competitive in international markets, while other countries on the global production value chain may face new challenges. For example, China will be impacted in the exports of automotive, mechanical and electrical products, and textile industry to the US. The Rules of Origin in KORUS FTA are relatively strict and complex, so that there will be some adjustments in the Goose Model of East Asian integration, especially the lower value-added "Made in China". Under the circumstance of diminuendo in the labor cost advantages, and immature technology transition, China should as soon as possible deal find correct place to deal with challenges.The thoughtful idea in this paper is to analyze impacts and effects of KORUS FTA from the perspective of the Rules of Origin. Rules of Origin play a key role in free trade agreement, and most of the international trade in goods is intermediate goods. To a certain extent, the substance of the Rules of Origin can be understood to enhance the content of the intermediate products in the localization. Overly stringent Rules of Origin may lead to non-economic distribution of production factors, and affect the efficiency of free trade agreements, while less stringent Rules of Origin also potentially breed free-riding behavior, and reduce the welfare of FTA members. This thesis consists five parts. Part1describes theoretical overview about the Rules of Origin and its influence in international trade, and provides literature review on both KORUS FTA and Rules of Origin. Part2describes the background of KORUS FTA. main content of the Rules of Origin in KORUS FTA, and analyzes the existence meaning of the Rules of Origin in KORUS FTA from the perspective of roles and transaction costs, and then broadly compares KORUS FTA with Korea-EU FTA. Part3conducts analysis of the economic effects, the restriction effects, and political effects of the Rules of Origin in KORUS FTA with the method of combining quantitative and qualitative analysis. First, to analyze the impact factor of the Rules of Origin in US Bilateral Trade in expanded Gravity Model, and estimates the Rules of Origin in KORUS FTA will increase US-Korea trade by179.4%. Second, to estimate the stringent index of the Rules of Origin in KORUS FTA based on existing strict index system, and analyzes the restriction effects of the Rules of Origin in KORUS FTA. Last of this part is to analyze the political effects of the Rules of Origin. Part4focuses how China will be impacted by KORUS FTA in import and export trade, especially the problems that "Made in China" has recently faced. Part5is the conclusion and future research directions about KORUS FTA.