FTA Negotiations Research Articles

A Prospective Study on the Economic Effects of China-GCC FTA - Simulation and Analyses Based on GTAP Model

In the context of the "Belt and Road" initiative, this paper is based on the China-GCC FTA negotiations, and uses the Global Trade Analysis Model (GTAP) to construct six scenarios of tariff reduction in key sectors and reduction of technical barriers to trade (TBT) between China and the GCC countries, and to assess the impacts of the construction of the FTA on the economies of China and related countries. The paper shows that increased trade liberalization has a positive economic impact on the China-GCC FTA. At the same time, tariff changes in the manufacturing and oil and gas industries dominated the tariff reductions, but the reduction of technical barriers to trade (TBT) has a particularly significant impact compared to tariffs. Bilateral trade will contribute more remarkably to China's continued economic growth than in the GCC countries. Reductions in trade barriers will effectively boost production demand in Chinese and GCC countries, contributing imports, exports and output, which will benefit both economies, specially, China's trade surpluses increasing particularly in various sectors.

La negociación de tratados de libre comercio entre Ecuador y Panamá con la República Popular China

In recent years, the Latin American region has suffered profound impacts because of systemic transformations such as the weak global economy, the Covid-19 pandemic, the trade war between China and the United States and even the emergence of new conflicts. This scenario implies challenges, especially for small countries in the region, such as Panama and Ecuador, which have implemented trade coordination strategies with the People’s Republic of China through free trade agreements. However, these strategies are also seen as containment mechanisms in the face of the scenario of crisis and uncertainty that characterizes the international system. The article analytically reflects on the FTA negotiation process by Panama and Ecuador with China, instruments that are part of the Commercial Diplomacy strategy as an exclusive format of negotiation and relationship with various strategic partners. The article argues that, given the vulnerability of small countries regarding recent global transformations, they have decided to implement adaptive and containment strategies with China on the commercial agenda.

Article: Domestic Interest Groups and India’s Trade Policy Preferences in India-EU FTA Negotiations

Article: Domestic Interest Groups and India’s Trade Policy Preferences in India-EU FTA Negotiations

The Impact of the Second Phase of China-South Korea FTA Negotiation on China's Service Trade -- Simulation Analysis Based on GTAP Model

The second phase of China-South Korea FTA negotiation is underway, its main negotiation content is focused on the service trade and investment field, this is the first time for China to carry out the negative list mode of related negotiations, and has made substantial progress at this stage, is expected to sign the agreement in the past two years. However, from the perspective of the second stage negotiations between China and South Korea, there are relatively few studies to analyze the possible impact of the signing on China, especially on various industries of service trade. Therefore, this paper takes the negotiation as the background, takes the service trade as the research object, and on the basis of fully analyzing the development status of the service trade between China and South Korea, uses the GTAP model to empirically analyze the impact of the reduction of service trade barriers in three different scenarios on the macro-economy and service trade of China and South Korea, and draws a conclusion: The conclusion of this negotiation will bring a very obvious positive effect to China and South Korea, and the positive effect will increase with the degree of service trade opening between the two countries, and on this basis, corresponding policy suggestions are given.

Trade efficiency under FTA for Thailand’s agricultural exports: copula-based gravity stochastic frontier model

This study investigated the trade efficiency and trade effects under Free Trade Agreements for Thailand’s agricultural exports. There are five main trading partners comprising China, Japan, Australia, New Zealand, and India. The important agricultural commodities of rubber, cassava, fruits, vegetables, and herbs were assessed from 1998 to 2019. In a traditional stochastic frontier model the two error components of symmetric noise ({nu }_{j}) and a non-negative inefficiency ({u}_{j}) are assumed to be independent. This may result in invalid inferences due to misspecification. To address this obstacle, copula-based Gravity Stochastic Frontier Models (GSFM) using panel criteria were constructed to estimate trade efficiency. Empirically, the Student-t copula-based SFM minimizes both AIC and BIC. According to their mean TE, China (0.48) and Japan (0.48) had the highest export efficiencies followed by India (0.41), New Zealand (0.39), and Australia (0.33) in rank order. Hence, Thailand should pursue more FTA negotiations with the trading partners. Moreover, they should promote miscellaneous behind-the-border barriers to stimulate flows of goods to enhance the country’s trade efficiency substantially.

RCEP의 원산지 규정의 특성과 적용

Purpose – This study examines the characteristics of the rules of origin for RCEP, an agreement concluded by Korea, identifies problems that may arise when applying the rules of origin of RCEP, and proposes countermeasures. Design/Methodology/Approach – Whether or not the benefits of FTAs are realized depends on the various characteristics of FTAs, among which is the Rule of Origin (RoO). Looking at the relationship between the unification of the criteria for determining the country of origin, as each FTA determines the country of origin differently, the cost is greater than the tariff benefit that occurs when applying this to the FTA. As such, it is a realistic issue that may force giving up the FTA due to the spaghetti ball effect. We intend to contribute to the facilitation of trade through the unification of origin determination criteria to solve the problem. Findings – By examining the characteristics of the rules of origin and presenting institutional problems and supplementary points that may occur when the RCEP's rules of origin are applied, conclusions that can serve as references for the remaining FTA negotiation tasks have been drawn. Research Implications – The suggested four implications establish a more diversified trade structure by converging on all active, efficient, and feasible exports and imports, and contribute to the increase in Korea's trade volume through trade liberalization and market opening in the current situation wherein the international trade environment is rapidly changing. For this purpose, RCEP must be applied effectively.

The Potential Economic Effects of a Korea-GCC FTA

Purpose-Currently, the Korean government has not officially taken a position on the Korea-GCC FTA negotiations due to the Middle East s complicated political and economic situation. However, this study attempts to analyze the potential economic effects of an FTA between Korea and GCC member countries, taking into account the possibility of a resumption in the future. Design/Methodology/Approach-Using a global, multisector, computable-general-equilibrium (GTAP) model and GTAP database Version 10A (the most recent), this paper undertakes the identification of the economic impacts of a Korea-GCC FTA. The baseline scenario was designed using the World Bank s macroeconomic data, such as real GDP, population, labor, and capital from 2015 to 2019 to calculate future estimates. Policy scenarios were established by a (1) 90% reduction in tariffs on goods, (2) a 50% reduction in ad valorem tariff equivalents on services, (3) a 0.15% increase in TFP (total factor productivity), and (4) lastly, the above three scenarios were combined to see the effects of a Korea-GCC FTA. Findings Simulation results showed that real GDP in Korea (0.11%) and GCC member countries (0.13% ~ 0.46%) increased, indicating that a Korea-GCC FTA would have a positive impact on economic growth on both sides. The impact on welfare also reveals similar results to GDP, showing the largest increase in Korea (about USD 2.2 billion), followed by Saudi Arabia and UAE (about USD 2 billion and USD 1.6 billion, respectively). When looking at the effect of Korea s exports by industry, exports of automobiles and parts increased the most (about USD 1.5 billion), followed by the electronics (about USD 1.19 billion), machinery (about USD 1.05 billion), steel (about USD 1 billion), and petrochemical (about USD 420 million) industries, suggesting that overall exports are expected to increase in Korea s manufacturing industry. In the case of the petrochemical industry, exports to countries other than GCC member countries are expected to increase by approximately USD 3.9 billion, which is the largest benefit. Research Implications-This study suggests the justification and necessity of an FTA. Overall, positive effects will be expected in terms of real GDP, welfare, exports, and imports. In addition, if Korea and GCC member countries sign an FTA, exports of Korea s major manufacturing sectors will increase, and GCC member countries will see an increase in oil (crude oil) and gas exports, creating a win-win situation. As the industrial structure between the two sides is complementary, a synergy effect can be expected, and an FTA with GCC countries rich in natural resources such as oil and gas can enhance energy security.

Congruence-building on multiple fronts: Indian elite perceptions of EU rule promotion in India during the EU-India FTA negotiations (2007–2013)

How does the European Union export its rules and regulations to its partners during free trade negotiations? While the research fields on EU foreign policy promotion abroad and external perceptions seem to have settled on the notion that the success of EU rule export increases with the internalization of the negotiation partner’s wants, this article challenges this academic consensus. Scrutinizing the EU-India free trade negotiations (2007–2013) where the perception of EU norms turned from positive to inherently negative, the article shows that the Commission successfully constructed the notion of congruence between European and Indian standards on multiple (international, bilateral, regional) fronts during an initial “honeymoon phase” (2007–2011). Yet, once the negotiations’ focus shifted to hard bargaining over core interests, the notion of congruence gave way to tensions and discrepancies, so that perceptions turned negative over the “cooldown” (2011–2013). Analysing claims made by EU and Indian policy officials in four Indian English-speaking quality newspapers—Times of India, Hindustan Times, Hindu Business Line and the Business Standard—the article suggests that the discursive construction of congruence with the local context, however successful, cannot prevail against battles over core interests. Hence, this article provides starting points for new academic junctures in that it introduces a more nuanced understanding of the EU’s approach to rule promotion abroad.

Exporting environmental objectives or erecting trade barriers in recent EU free trade agreements

The European Union (EU) has historically sought to influence environmental policies of other countries through multilateral environmental agreements. Under its 7th Environmental Action Plan and Trade for All strategy it now seeks to extend its environmental policy projection through trade; its recent free trade agreements now contain chapters addressing environment and sustainable development. However, by adopting high environmental standards the EU can also advance its own economic interests suggesting an ambiguous motivation. The recent Korean, Japanese and Canadian FTAs and the Mercosur agreements are examined in order to place the extent of this environmental turn within the context of economic advantage. The finding is that while environmental protection provisions in these FTAs may have environmental benefits, they may also serve EU domestic economic interests. This motivation has implications for new FTA negotiations, such as those with New Zealand and Australia, and now the UK.

'Stretching the Imagination': Geographical Indications in the EU-Australia FTA Negotiations

The launch of negotiations for an EU-Australia 'free trade agreement' (FTA) on 18 June 2018 was a confirmation of a 'like-minded' strong partnership, in which both parties had high hopes for an ambitious agreement which would test the new wave of protectionism promoted by Donald Trump.Nonetheless, the initial rounds of negotiations revealed several issues which illustrate the scale of the challenge to be addressed. One such example was the issue of Geographical Indications (GI). The EU and its member states adopt an approach which is highly regulated and prescriptive to safeguard the authenticity of its produce and encourage rural development. Australia approaches this kind of intellectual property issue via a trademark system as well as a sui generis system to better capture the benefits of innovation. This paper analyses the challenges and opportunities an accord on GI's could have for both regions, as revealed in the context of the EU-Australia negotiations. The paper claims that while an agreement on GI's was a significant outcome for the overall FTA, the process adopted by the EU and Australia was in itself a reflection of the ambition for an amicable, dynamic and innovative negotiating process.

Indonesia’s Trade Diplomacy Through FTA: Analysis on Actors, Processes, and Goals of Diplomacy

The purpose of this article is to examine the various FTAs that Indonesia has been involved in within the last 15 years by looking at the three core elements of trade diplomacy: actors, processes, and goals of FTAs. Based on these elements, this research finds that Indonesia’s FTA diplomacy tends to be dominated by foreign policy interests compared to economic ones, which can be observed through several elements. First, Indonesia’s FTA diplomacy is dominated by state actors and foreign policy players with little involvement from economic players and non-state actors. The numerous FTAs signed through ASEAN also reinforced this domination since ASEAN’s distribution of authority placed foreign policy players at a higher hierarchy than trade actors. Second, Indonesia’s FTA diplomacy tends to be inefficient and ineffective due to dualism in its diplomatic process, which involves collective negotiations through ASEAN and at the same time, individually through the national government. This resulted in a multiplicity of agreements, leading to the low number of FTA utilisation by private sectors. Third, Indonesia’s continued use of ASEAN as a medium for FTA negotiations leads to the strengthening of foreign policy goals relative to economic ones, due to ASEAN’s internal characteristics which focuses more on political-security relations, rather than economic ones. Based on these observations, Indonesia needs to reposition its FTA diplomacy to find a better balance between its foreign policy and trade goals.

對개발도상국 특혜무역협정 확대 및 활용 방안: 아프리카와 대양주 지역을 중심으로(Korea's Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions)

對개발도상국 특혜무역협정 확대 및 활용 방안: 아프리카와 대양주 지역을 중심으로(Korea's Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions)

Taking Cultural Goods Seriously: Geographical Indications and the Renegotiation Strategies for the Korea‐EU FTA

AbstractGiven the possible renegotiations of the Korea–European Union FTA, this study focuses on the geographical indications (GIs) system included under the Korea–EU FTA and proposes a strategy for Korea to utilize GIs effectively. GIs have been gaining greater importance as a way to safeguard cultural goods in the global trade market against the impact of globalization. For Korea to utilize GIs to its advantage, the EU’s strategy during the Korea‐EU FTA negotiations can be a useful reference. That strategy is one that is centered on the protection of the EU’s GI products in other countries, rather than in the Korean market. This ‘roundabout strategy’ of the EU is one which Korea can apply in order to realize its goal to differentiate its own products from those made by its neighboring countries, Japan and China. The lesson Korea can learn from the EU’s roundabout strategy is that GIs based on locality and traditions can not only play a role as a source of potential economic revenues but also as an effective assertion of national cultural identities which are often overshadowed by the prominence of the larger region.

국제통상체제 하 환경규범 발전과 對한국 시사점

Free trade and environmental protection have hardly maintained a symmetric balance for more than half a century in spite of the necessity and importance of the matter. The multilateral trade system, represented by the GATT and the WTO, was in the end unsuccessful in dealing with the field, leaning towards the economic objectives as found in multiple trade dispute cases. With the drift of the multilateral system, better known as the DDA, FTAs have overthrown the role and significantly contributed to the legal development of trade-related environmental provisions, mainly led by the United States and the European Union. They not only provided a model text for the environmental provisions in FTAs, yet also transplanted such DNAs in their FTA partners. Korea is one of the pertinent examples and has experienced a quantum-leaf-like evolution in such provisions by negotiating the agreements with the two nations simultaneously. The lessons Korea learned from the United States and the European Union are expected to assign a more meaningful role to the nation in its future FTA negotiations, especially when Korea encounters with the trade partners that are yet to perceive the significance of mutual prosperities of trade and environment.

Why breakup? Looking into unsuccessful free trade agreement negotiations

In this first attempt to systematically analyze why countries (not) sign FTAs, we differentiate between country pairs that initiated negotiations but did not reach conclusion from pairs that did not initiate negotiations. By comparing successful and unsuccessful negotiations, we can have a better understanding why countries decided (not) to pursue FTAs. In explaining the outcome of FTA negotiations, the paper sheds light onto negotiation resources from three perspectives: resource allocation, resource diversion and resource requirement. By conducting a systematic comparison of 25 FTA negotiations conducted by Singapore, the study finds that FTA negotiation tends to be unsuccessful when (1) negotiating parties do not have diplomatic missions in the partner country (resource allocation); (2) negotiating parties conduct multiple FTA negotiations in parallel (resource diversion); and (3) negotiation becomes complicated due to the significant difference in MFN tariff between the two parties (resource requirement).

Study on the approach of promoting service trade of traditional Chinese medicine into Sri Lanka

Sri Lanka and China enjoy profound traditional friendship and active bilateral friendly cooperation. With the deepening of bilateral FTA negotiations, service trade of traditional Chinese enters into Sri Lanka is also promising. Though the current policy and law exists insufficiency, leveraging the FTA negotiations, TCM-Center binding Confucius Institute, providing TCM features and developing tour routes of medical tourism can help to push service trade of traditional Chinese medicine into Sri Lanka. The development of overseas Chinese medicine health services is not only benefit to the local, but also contribute to the new pattern of Chinese economic reformation. Key words: International cooperation; Sri Lanka; Modernization of traditional Chinese medicine and pharmacy; Trade in services; History of medical exchange between China and foreign countries; Medical tourism

중국기업인의 대 한국 무역장벽인식에 관한 실증연구

This study is an empirical analysis of Chinese businessmen"s perception of Korea"s trade barriers in trade with Korea since the Korea-China FTA. Existing studies in Korea and China have mostly focused on trade barriers to their trade partner from their own perspective, and there have been few studies on their trade barriers from the viewpoint of their trade partner. This study examined the perception of Korea"s trade barriers through the survey from Chinese companies. The result also implies that the degree of dissatisfaction with tariff level is the most influential factor to the support of Korea-China FTA. Certification and cost factors came in second, followed by customs clearance, inspection/quarantine and technical trade barriers factors. In order to develop trade between Korea and China, some points to be considered. First, further negotiations are needed to lower the tariff rates of both countries faster than the FTA negotiations. Second, the drastic abolition of non-tariff measures in both countries. Third, it describes the details of the relaxation of non-tariff measures in the case of new FTAs or further negotiations between FTA partners. Fourth ,minimizing the effect of regulation that hinders trade.

A Comparative Study of the Export Competitiveness of Knowledge-intensive Manufacturing before and after FTA Conclusion

본 연구는 한-EU FTA 체결 전·후에 한국의 주요 수출품인 지식집약형 제품의 수출경쟁력을 중국과 비교·분석하였다. 수출경쟁력을 비교 연구한 결과, EU 내 한·중 경쟁이 심화되는 제품은 광학/의료 측정·검사 정밀기기(90)와 플라스틱과 그 제품(39), 무기화화물(29)로써 한국의 수출 증가로 중국과의 경쟁이 심해지는 형태였으며 일반차량(87)은 중국과 수출 규모와 시장 점유율이 비슷해 경쟁이 심해지는 형태, 선박(89)은 중국의 수출 하락으로 경쟁 우위가 지속되는 형태, 보일러 기계류(84)와 전기기기 TV·VTR(85)은 시장점유율과 수출경쟁력이 동시에 낮아지고 있었다. 이러한 연구 결과는 한-EU의 FTA 체결이 한국 지식집약형 산업의 수출경쟁력 개선에 크게 영향을 미치지 않는 것으로 첫째, EU에 대한 한국의 지식집약형 제품의 수출과 수출경쟁력은 FTA보다 EU의 경제 상황에 더 큰 영향을 받는 것을 의미하고 둘째, 한-EU FTA 효과가 낮기 때문에 경쟁국인 중국과의 수출 경쟁은 더욱 심해진다는 것을 의미한다. 그러므로 한국 정부는 FTA 협상 전략을 수정하고 제품별 협상 전략안을 마련해서 정부 정책의 변화를 바탕으로 FTA를 추진해야 한다.The study analyzed Korea s export competitiveness before and after the conclusion of the Korea-EU FTA by comparing Korea s knowledge-intensive products with China. Since the Korea-EU FTA, Korea has maintained a comparative advantage of H84, H87, H89, and H39. Products that increase competition in exports are H90, H39, and H29. The H87 is expected to become more competitive as it has a similar market share with Korea. Korea s H89 exports are increasing due to its comparative advantage, while H84 and H85 are declining in their export competitiveness. The results of the study show that the Korea-EU FTA does not have a significant impact on Korea s export competitiveness of knowledge-intensive industries. This means two things. First, Korea s export and export competitiveness of knowledge-intensive products to the EU means that it is more affected by the EU s economic situation than the FTA. Secondly, the Korea-EU FTA will be less effective, making it even harder to compete with China. Therefore, the Korean government should revise its FTA negotiation strategy and devise a product negotiation strategy to pursue the FTA based on changes in government policy.

The EU’s Proposal Regarding the Establishment of the Investment Court System and the Response from Asia

The EU has engaged in a large-scale global reform by proposing an investment court system as a means to address concerns about ISDS. The new proposal will certainly have certain impact on Asian countries in their FTA negotiations with the EU. This article analyses the key features of the investment court system, looking mainly at the CETA, EU-Vietnam FTA and TTIP texts for guidance, as well as how the EU’s proposal raises novel challenges. This article addresses, first, the EU’s reformed approach of investment dispute resolution and the repercussions from Asian countries; secondly, concerns which may persist in weighing the new court model and the existing investor-state arbitration system. Some Asian countries have been following very closely the new trend and raise a number of specific questions. It would be very interesting to understand the concerns of the Asian countries and analyse their current positions as well. It seems that Asian countries need to consider key elements concerning its establishment, including the need to build consensus among states, institutional aspect of the new permanent structure, issues relating to the decision-makers, and financial resources at stake. To sum up, the proposed reform is neither fully opposed nor fully supported.

Applying WTO and FTA Disciplines to Data Localization Measures

AbstractThe last decade has seen a proliferation of measures requiring data to be stored within national borders. Such restrictions, known as ‘data localization measures’, disrupt digital trade and run counter to the borderless reality of the internet. But the effectiveness of existing WTO rules to adequately discipline data localization measures remains inconclusive. In the absence of meaningful progress at the multilateral level, FTA negotiations are developing new models to address such barriers. This article compares how data localization measures would be disciplined under the General Agreement on Trade in Services (GATS) and theComprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP) framework. It argues that the CPTPP represents a significant advance on the GATS and strikes an appropriate balance between facilitating businesses’ growing need to transfer and store data across national borders while preserving governments’ right to regulate in the public interest.