The Impacts Of KORUS FTA On China’s Textile And Apparel Products Export To The United States

US-Korea Free Trade Agreement (KORUS FTA) has come into effect on March 15,2012. Its implementation will bring great political and economic interests to US and South Korea. Politically, KORUS FTA helps United States to limit China and achieve the Asia-Pacific strategy. To South Korea, it helps to ensure regional security. On the economy, particularly on trade, the KORUS FTA will effectively promote trade between the two countries. But it will has a certain negative impact on trade between member countries and non-member countries, especially for the products trade of high similarity.China and South Korea’s textile and apparel products have high structure similarity in the United States market After the KORUS FTA came into effect, US and South Korea will phase out import and export tariffs on textile and apparel products. Under the influence of tariff reduction and trade diversion effect, South Korea will replace some share of China’s textile and apparel products in the United States market. The implementation of trade impact that the KORUS FTA has on third countries outside the region depends on the ROOs. They first determine the origin of products by the ROOs, and then determine whether the products can enjoy some preferential treatments like tariff concessions or elimination. KORUS FTA ROOs in a certain extent, promotes Korea’s textile and apparel products export to the United States and hinders China’s textile and apparel products export to the United States. US and South Korea also attaches great importance to the ROOs in the negotiations. KORUS FTA ROOs is very strict and complex. It not only made provisions for the general rule, but also made a more specific provisions for some sensitive or important industries such as agriculture, automotive industry and the textile and garment industry. KORUS FTA ROOs of textile and apparel products is so complex that will undoubtedly exacerbate the impact on China’s textile and apparel products export to the United States.This paper analyzes the impact of the KORUS FTA on China’s textile and apparel products export to the United States from the perspective of the ROOs. This paper first analyzes some related concepts of ROOs, and uses partial equilibrium model to analyze the role of ROOs in free trade zones. Then this paper provides literature review on both related research on preferential ROOs and research on the impact of the KORUS FTA. Besides, this paper further introduces the general rules of the KORUS FTA ROOs, specific ROOs for textile and apparel products and calculate the stringency of the KORUS FTA ROOs. It also compares and analyzes the status quo of China and South Korea’s textile and apparel products export to the United States, predicts the impact on China’s textile and apparel products export to the United States by calculating and comparing the structure similarity of China and South Korea’s textile and apparel products export to the United States. Further, this paper does empirical research about the impact ofthe KORUS FTA ROOs on China’s textile and apparel products export to the United States through expanded gravity model. The results show that ROOs in the FTA has an effect on the textile and apparel trade between the United States and its trading partners. The KORUS FTA ROOs in a certain extent, hinders the China’s textile and apparel products export to the United States, but promotes South Korea’s textile and apparel products export to the United States. Finally, this paper gives summary and puts forward the corresponding recommendations from the aspects of government, relevant enterprises and academic research.Research in this paper helps China to learn experience and improve negotiating ability when we sign and effectively use FTA ROOs, especially for the textile and apparel industry. At the same time, it helps China to clear international trade environment for our textile and apparel products, and promotes the development of our textile and apparel products trade and industry.