Since the1990s, the number of Regional Economic Integration increases all over the world, during which Bilateral Free Trade Agreements are the major component and becomes an increasingly worldwide universal economic phenomenon. Under the backgrounds that US-Korea bilateral trade relations have alienated, the US-Korea Free Trade Agreement was officially launched negotiation in February2006. After14months of tough negotiations, US and Korea finally ends the significant and historical free trade negotiation process and sign the FTA on April2007. The agreement contains more than a dozen areas, such as agriculture, garment and textile industry and car industry. After the FTA has been signed by both sides, there are also lots of differences on sensitive issues which lead to disagreement by both congresses. But both countries could gain significant economic interest and political benefit by implying FTA, negotiators of both sides got to an agreement once again on December6,2010and the FTA came into effect in March15,2012.US-Korea Free Trade Agreement is signed under the backgrounds that Chinese economic grows fast, influence on Asia-Pacific economic becomes strong and China-Korea trade relation gets closer. All of these promote US to sign FTA with Korea. At the same time, Korea tries to get rid of the awkward status in the East Asian and reduce the foreign trade degree of dependency through the FTA. It’s the best way for US to contain the rise of China, to enhance its influence in the Asia-Pacific region and to consolidate the hegemony in the world. Also, it’s the eventful step for Korea to break Japanese superior technology, high productivity and Chinese low cost, rapid development of technology. US-Korea FTA is expected not only to give a huge impact on both countries’ economies, but also on neighboring countries.As US and Korea are both important trade partners of China, the US-Korea FTA will influence the trade cooperation not only between China and Korea, but also China and US through trade diversion effect. Further, this will also influence China’s export in short time, especially on export mainstay industries like agriculture and textile industry.This study tries to analyze the US-Korea FTA’s effects on China’s trade, absorbing FDI and environment of East Asia. The GTAP model is used to analyze the specific impact of China’s GDP, the overall welfare and specific industry trade which are given by the implementation of US-Korea FTA. Finally, this study tries to find out ways to upgrade the industrial structure, improve the FTA strategy and then take appropriate trade strategy to deal with. |