China and South Korea signed a bilateral free trade agreement on 1 June in the year 2015, and the major aim of the trade is to eliminate around 90% of import tariffs, which will substantially boost trade between those regions. The trade between those two regions always had quite big volumes. The discussions about the agreement began in the year 2012, when the China-South Korea trade constituted around $215 billion. The expectations state that with the signing of this free trade agreement, the trade will significantly increase and the volumes will exceed $300 billion. This agreement includes various spheres of activities, and China has included such industries as telecommunications, e-commerce and financial sector of business. Bilateral agreement between China and South Korea implies many benefits for those two regions, and the countries expect it to have positive implication for the economies of the countries. In addition, China and South Korea are already discussing future cooperation and plan to remove the barriers in service sector by the year 2017 (Zeldin, 2015).
Besides benefit for China and South Korea, this bilateral agreement has substantial effects on the other players in the world’s economy, specifically for the United States. United States is one of the largest world’s exporters and importers in various industries, and it has bilateral free trade agreements with around 20 countries, including Korea. The point is that the new agreement between China and South Korea may decrease the level of trade between those countries and USA, because now those regions have a possibility of mutual benefits from trade activities due to geographical location, which reduces costs, and due to high variety of sectors that the bilateral agreement between China and South Korea covers. In addition, USA is experiencing trade deficit, because the volume of China imports exceeds the volume of USA exports.
However, USA should continue to work in the agreements, because it may open new horizons for the new industries and can significantly facilitate trade with other regions. The country should pay attention to the deficit in its exports to China and can work on this issue by trying to produce more for the mutual trade. China-South Korea bilateral agreement makes the situation worse for USA, but at the same time serves as an incentive for future work.
Work with FTAs have many advantages, and among them, there are (Export.gov):
The possibility for U.S. exporters to take participation in the development process of the product standards in the partner-country;
The possibility for U.S. companies to make bids on government procurements in the partner-countries;
The possibility of US companies that are the suppliers of services to offer their services in the partner-countries;
The policy of protection of the intellectual property owned by Americans in the partner-countries;
The possibility of U.S. investors to get adequate compensation for the investment made in the partner-countries.
In such a way, the benefits are numerous, and it is favorable to work with FTAs.
Various trade agreements have contributed to the formation of various trade groups, such as WTO, NAFTA, APEC, ASEAN, and others. European Union also represents a large group of countries that have mutual agreements on trade that helps to increase the volume of exports and imports within this economic body.
It will be useful to discuss the membership in one of this agreements and the status of pending countries, and what influences the membership of this or that region in the organization. For instance, EU consists of 28 countries and it represents the largest economy in the world. The thing is that rather than having 28 separate members on the global arena, EU comes as one strong entity, members of which found a way for cooperation in order to draw significant benefits and to keep the level of steady growth. In such a way, EU represent the largest trading block in the world, though there are other large blocks that also have significant influence on the international economy. It is also worth to mention that “The European Union is the top trading partner for more than 80 countries, while the US is the top trading partner for a little over 20 countries” (Ec.europa.eu). Moreover, EU has such a big influence and wide connections, because it stick to the policy of openness to the developing countries. In such a way, EU is the importer from more developing countries, than such economies as Japan, China, USA and Canada altogether (Ec.europa.eu).
As far as EU represents the largest economy in the world. The GDP per head in this region is around 25 000 euro per capita for more than 500 million of members (Ec.europa.eu). Consequently, European Union takes the question of accepting the membership of new countries very carefully. Some of the countries that are pending membership in the EU are the following:
Turkey (the country applied for membership back in the year 1987, and the negotiations started in the year 2005, but are dramatically slow). There are still obstacles for the country to join EU, because it has several violations, such as human rights abuse, and Turkey should work on its elimination (Bbc.com). GDP per capita: $8872 (2014); GNP – 33641401.3 TRY THO (Tradingeconomics.com).
Serbia (the country applied for membership in the year 2009 and got the acceptation as a candidate in the year 2012, still, the negotiations are still in the process). GDP per capita - $4245 (2014) (Tradingeconomics.com).
Therefore, we can see that in order to get into any organization, the country has to go through the stage of preparation and has to have stable economy, in order to maintain the standards of the organization and to bring benefits for other members of the chosen community.
References
EU Enlargement. (2014, September 02). Retrieved April 04, 2016, from http://www.bbc.com/news/world-europe-11283616
EU position in world trade. (2014, October 02). Retrieved April 04, 2016, from http://ec.europa.eu/trade/policy/eu-position-in-world-trade/
Serbia GDP per capita. (n.d.). Retrieved April 04, 2014, from http://www.tradingeconomics.com/serbia/gdp-per-capita
Turkey GDP per capita. (n.d.). Retrieved April 04, 2016, from http://www.tradingeconomics.com/turkey/gdp-per-capita
Turkey Gross National Product. (n.d.). Retrieved April 04, 2016, from http://www.tradingeconomics.com/turkey/gross-national-product
U.S. Free Trade Agreements. (2013, January 11). Retrieved April 04, 2016, from http://export.gov/fta/
Zeldin, W. (2015, June 11). China; South Korea: Landmark Free Trade Agreement Signed. Retrieved April 04, 2016, from http://www.loc.gov/law/foreign-news/article/china-south-korea-landmark-free-trade-agreement-signed/
