Research On Trade Of Mechanical Products Between China, Japan And Korea In FTA Perspective

China, Japan and Korea are neighbors sharing similar historical origin and culturalbackground separated only by a strip of water. The three countries are big economicpowers, their GDP and trade volume enjoys a significant role in the world. For a longtime, the three countries have kept a large but steady-increasing trade relation. China,Japan and Korea has an advanced and complete mechanical and electronic industryrespectively, as a result, mechanical and electronic products are the primary productsof commodity trade among the three countries. Currently, economic integration is inthe ascendant within this region. Considering the status quo of its level, conducting astudy of mechanical and electronic products trade among the three countries in theperspective of a CJK FTA will be of great significance in promoting mechanical andelectronic products trade liberalization, deepening industrial division andcollaboration of mechanical and electronic products among the three nations andenhancing all-round economic cooperation within this region at large.This essay summarize the status and characteristics of mechanical and electronicproducts trade among the three countries first, then conduct an in-depth analysis onthe relations from the perspective of intra-industry trade, trade competition and tradecomplementarity. Then the essay discusses the basis and conditions of a possible CJKFTA, traces the process and latest developments of the CJK FTA negotiations as well.The paper conducts a focused analysis on the possible effect of CJK FTA onmechanical and electronic products trade among the three countries, on the one hand,analyzing and measuring static effect including the trade creation and diversion effectby using gravity model, general equilibrium model and partial equilibrium model. Onthe other hand, this essay discusses the possible dynamic effect of a potential CJKFTA on tripartite mechanical and electronic industries from the perspective ofeconomies of scale, competition and investment. Based on all the discussions andanalysis above, three recommendations are proposed respectively.