A Comprehensive Analysis Of Free Trade Area Strategy

With the development of international economy, more and more countries are developing various forms of cooperation with other countries and regions in order to achieve mutual benefits and win-win goals. Economic globalization and regional economic integration are main trends of cooperation among countries. WTO is the representative of economic globalization, its development has many obstacles recently. Meanwhile regional trade arrangements show their flexibility, especially free trade areas are undergoing vigorous development, so the importance of academic research of free trade areas has been widely recognized.FTAs are not simple economic cooperation. Because of the different histories, economies, politics, cultures and present conditions, every country and region has different demands. So the most important matter to be solved is to investigate the results of FTAs, and analyze how a country use FTAs to mediate the relationship with other countries. The past literature about free trade areas mostly investigated the effects of FTAs from the perspective of a single country, or only discussed the economic impacts of free trade areas, this paper tries to systematize the theory of free trade area effects, to comprehensively analyze the comprehensive consideration of countries when choosing strategy of FTAs, the effects of free trade areas will be not only from the economic effects side, but also from the non-economic effects.Chapter 1 selects topic background and research significance of this paper, introduced the basic situation of free trade areas, including the concepts, the development course and so on, Chapter 2 summarizes the domestic and foreign theory and literature about FTA, Chapter 3 summarizes the motivation theory of the booming FTAs, respectively from the pursuit of its economic effects, the expected non-economic effects, the superiority of FTA itself and the trend of strengthen. Chapter 4 and Chapter 5 respectively analyze economic effects and non-economic effects of FTAs with the method of empirical analysis and case study. Chapter 4 uses the 1999-2013 panel data of typical Asian countries and representatives on behalf of other continents, using gravity model, through the fixed effect method and difference-in-differences model to investigate the influence of FTAs to trade, and used the diff-GMM, two-stage least squares method to show the results are robust, the empirical results confirmed the free trade area does have significant and positive effects on trade. Chapter 5 uses the example of the United States and India, respectively discusses the key factors and main concerns of developed countries and developing countries in promoting FTAs, especially focuses on the non-economic effects. Finally Chapter 6 is conclusion and suggestions. According to research above, put forward suggestions to implement the strategy of FTA, including preparation, control measures and support methods, especially, work for the implementation of FTA strategy of China.