• Journal of Korea Trade
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• v.26 no.1
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• pp.33-56
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• 2022

Purpose - This paper explains how free trade agreements (FTAs) work as a building block to achieve global free trade and be better than other trade regimes. Design/methodology - This paper utilizes a trade liberalization game setup. Three countries choose a trade agreement strategy based on a given trade regime. Trade agreement is made only when all member countries agree. The paper evaluates each trade regime concerning FTAs and customs union (CU) by area size of global free trade equilibrium on the technology or demand gap between countries. Findings - FTAs make global free trade easier. In this game, there are two main reasons for failure to reach global free trade. First, a trade regime with FTAs makes non-member face difficulties in refusing trade agreements in the existence of a technology gap than a trade regime without FTAs. Also, a trade regime with FTAs causes it harder to exclude non-members in the existence of a demand gap than a trade regime with only CUs. Therefore, a trade regime with FTAs can work better in reaching global free trade. Originality/value - The concept of "implicit coordination" was used, which assumes that FTA members keep external tariffs for non-members the same as before an FTA. Without this consideration, FTA members lower their tariffs to non-members, and it makes non-member refuse free trade easier. FTA can prevent it sufficiently only with implicit coordination. This makes the trade regime with FTAs more effective to reach global free trade.

• Journal of Arbitration Studies
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• v.15 no.3
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• pp.233-266
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• 2005

The world trading system has been under many changes in recent years. One notably important development is that much attention away from the multilateralism-oriented World Trade Organization towards FTA(Free Trade Agreement). The Free Trade Agreement signed between korea and chile formally have been come effective for free trade in goods and services as from April 1, 2004. During Free Trade Agreement negotiations between both countries. This study aims at presenting the suggestion for the Korea to make the WTO rules and FTA by analyzing The interpretation of FTA under WTO System. It was founded by the investigation of WTO rules, most of the provisions are similar with other FTA, but a little provisions different from other FTA's. It is an appearance from the contracting party's peculiar circumstances such as state of industrial development or future prospect, conditions around international trade. The whole world has entered the new stage of bilateral and multilateral FTA. The essential or new generation or bilateral and multilateral FTA is creating more trade opportunities, promoting all factors, commodity, service, capital, technology and talent freely flow through canceling the trade barriers between FTA, in order to develop together within the regions. It shows that the cooperations transfer form the whole region into FTA. FTA makes not only the free trade smooth ,but also takes place the trade distortion effect. especially as the agriculture has a speciality each country, should it is ignored in negotiation, many reactions will be occurred in the process of fta Therefore Korea needs to deliver the message that Korea's hub is an essential ingredient for an efficient FTA and WTO system in a bilateral and multilateral win-win framework. Consequently Korea should have criterions about the rules of FTA and WTO system for peculiar circumstances of Korean economy and international trade.

• Journal of Korea Trade
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• v.23 no.3
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• pp.84-104
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• 2019

Purpose - This paper explains why free trade agreements (FTAs) are more popular than customs unions (CUs) in respect of tariff coordination. Design/methodology - This paper employs an equilibrium theory of trade agreements with tariff coordination. I set up three-country partial equilibrium model with competing exporters. Domestic and exporting firms decide their optimal production under given tariffs and each country levies its tariff under the trade agreements. I found stability of implicit tariff coordination and preference of each country between an FTA and a CU. Findings - I demonstrate that two FTA members can keep their external tariffs higher than separately decided external tariffs by keeping the status-quo. This implicit tariff coordination can benefit each member through trade diversion. In a CU, each member country must have a common optimal external tariff and it must incur costs because each country may seek different external tariffs for their own national welfare. The benefit of implicit coordination in an FTA and the cost of explicit coordination in a CU account for the popularity of the FTA. Originality/value - This paper uses the idea of implicit tariff coordination in trade agreements. In a CU, tariff coordination is explicit and mandatory. All member countries must have a single common external tariff for each good. On the other hand, in an FTA, each country establishes its external tariff with the goal of maximizing its own welfare. However, each country can also coordinate "implicitly" by keeping the status-quo after establishing an FTA.

• Journal of Korea Trade
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• v.24 no.5
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• pp.1-17
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• 2020

Purpose - This paper tries to estimate the effects of China's and Japan's free trade agreement (FTA) by panel generalized least squares (GLS). Design/methodology - The GLS model includes the basic gravity theory and Difference in Difference (DD) method to divide FTA conclusion countries and non-FTA conclusion countries with China and Japan. In order to empirically research the difference between Chinese and Japanese FTAs, we use the Difference in Difference in Difference (DDD) method. Findings - This paper finds the distance variable has more influence on Japanese than Chinese trade. The exchange rate indicates that Chinese trade depends on export and Japanese trade has the structure of re-import; shows that the countries that concluded FTAs with China and Japan have more positive trade effects than those that did not; finds the Chinese FTA promotion effects greater than the Japanese FTA because China had pushed ahead with trade policy since joining the WTO in 2001. Originality/value - This study shows that a single country's FTA and trade policies are an important factor concerning not just the promotion of trade but also the issue of trade conflicts.

• Korea Trade Review
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• v.42 no.6
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• pp.87-110
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• 2017

The purpose of this paper is to investigate the roles and effects of FTAs (Free Trade Agreements) in agroindustrialization, and to navigate its implication for the government support for the utilization of FTAs in the agriculture sector. The paper, in particular, is based on a case of contract farming, which has often referred as the key factor of agroindustrialization. By doing this, this paper has the importance academically in enhancing the study of FTA utilization to the study of agroindustrialization, and practically in exploring the implication for the FTA implementation policy that provides fundamental solutions to the issues of agriculture sector. As the results of this study, it is highlighted that the role of government that intermediates, monitors, and controls the equal and the fair relationship between the agribusiness firms and farms is essential for the further progress of agroindustrialization under the keen competition created by FTAs.

• Journal of Korea Trade
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• v.26 no.6
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• pp.41-60
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• 2022

Purpose - The policy implications of free trade agreements have traditionally been a matter of debate among economists. The official signing of the Korea-China Free Trade Agreement provides economists with a quasi-natural experiment to analyze the FTA's policy effects. This article aims to more accurately understand the impact of Korea's FTA accession on the macro economy. Design/methodology - This study adopts the counterfactual method based on panel data to find common factors in the generation process of macro data to fit the counterfactual path, to accurately evaluate the effect of the macro policy. Findings - Our research results show that the signing of the Korea-China FTA has a relatively significant short-term positive effect on Korea's economic growth. On average, Korea's real GDP growth rate has increased by 2.1%. This study finds evidence in support of FTA signing not having a significant impact on Korea's GDP growth in the long run. Additionally, we evaluated the impact of the FTA on Korea's imports and exports and found that it had a significant positive impact in the short term, but the trade effect of the FTA is significantly affected by the external macro-environment. Originality/value - First, this study uses macro panel data at the national level to examine the impact of the Korea-China FTA on Korea, and more accurately describes the policy effect of the FTA. Second, our empirical results show that the Korea-China FTA policy impact is subject to occasional changes in the external environment, such as the geopolitical conflict (crisis) between Korea and China, and the US-China trade war. Finally, the analysis shows that the short-term effect of FTA is significant but the long-term is uncertain, which provides empirical evidence for the debate on whether joining FTA can promote national economic growth.

• International Commerce and Information Review
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• v.9 no.1
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• pp.313-331
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• 2007

In a rapidly changing environment of international trade, the purpose of this study is to examine economic benefits and losses of each country involved in the negotiation on the Free Trade Agreement (FTA) in Northeast Asia and to prepare strategies for the negotiation in the FTA between Korea and China. Previous researches on FTA have been made mainly from the macroeconomic perspective. The approach in this study is a combination of regulatory, reviewing regulations, and economic making quantitative analysis of the economic effects of FTA, which are the basic background of FTA. In economic analysis, I estimated the macroscopic economic effects of FTA by examining the effects of FTA on the trade balance, GDP and production of focal countries through the Computable General Equilibrium(CGE) model using GTAP data set.

• Journal of Korea Trade
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• v.26 no.8
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• pp.58-76
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• 2022

Purpose - This study examined the Rules of Origin (RoO) as a factor affecting free trade agreements' (FTA) utilization and analyzed the causal relationship and the effects of these factors on the export performance of automobile parts companies. Design/methodology - We analyzed and verified the impact of FTA utilization and the export performance of automobile parts companies by dividing the characteristics of the RoO into complexity and uncertainty. Following which, various statistical analyses were conducted on the interrelationships among these variables. Findings - This research analyzed the effect of the RoO factors of complexity and uncertainty on the use of FTA and the export performance of automobile parts companies. We found that these characteristics of RoO were generally related to and affected the FTA use and export performance of these companies. Based on this, this study's investigation into the characteristics of the RoO would then help companies in better utilizing the FTA, as well as providing suggestions on how to effectively respond to the application of the FTA in the future. Originality/value - Companies that want to utilize FTAs in international trade must follow the RoO. In the Regional Trade Agreement (RTA), the country-of-origin is a key factor, with the RoO being an important requirement for the application of preferential tariffs. These regulations are a requirement for receiving FTA preferential treatment; however, they also cause difficulties to companies in using the FTA.

• Journal of Wellbeing Management and Applied Psychology
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• v.3 no.4
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• pp.1-4
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• 2020

Purpose: This research, based on the tariff reduction table negotiated by South Korea and China free trade area, the specific tariffs of the two countries in the implementation of the Korea-China Free Trade Agreement are calculated, and the global equilibrium model, the global trade analysis project (GTAP) model, is used to simulate and analyze the impact of the Korea-China free trade area on the output and trade of the two countries. Research design, data and methodology: The study conducted a survey on 2018 year GTAP 9.0data. After empirically analyzing the data, we believe that the Major industry in Korea and China will maintain its growth momentum. Results: This study shows that under the assumption that the average tariff of China and South Korea at the beginning of FTA was reduced to 20%, two scenarios were simulated. Two scenarios are simulated under the assumption that the average tariff of China and South Korea FTA will be reduced to 10%. Conclusions: This paper assumes that the average tariff of China-Korea FTA is set at 20%, 10% and zero tariff respectively in the early, middle and long term of the FTA construction. It considers the impact of China-Japan-Korea FTA on China- Korea FTA.

• Journal of Contemporary Eastern Asia
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• v.11 no.2
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• pp.27-45
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• 2012

Among political scientists, Japan's free trade agreements (FTA) with member nations of the Association of Southeast Asian Nations (ASEAN) has been considered to be a political tool that can compete against China for regional leadership in East Asia. However, this paper demonstrates that Japan's so-called FTA diplomacy towards ASEAN nations serves the broad interests of Japanese actors in both the political and economic sectors. Given the attention to Japanese domestic political issues, it is argued that diplomacy primarily facilitates a need for free trade with ASEAN and ASEAN markets for Japanese corporations to compete in the global economy and for the government to nurture Japan's stagnant economy by assisting these corporations. This work also contends that the unclear function of FTA as an economic good is due to the lack of the government capacity to effectively manage FTA diplomacy. This partly results from the conventional view with regard to Sino-Japanese rivalry.