The Impact of China's WTO Accession on China-Japan-Korea Trade Relation, and its Policy Implications for Regional Economic Cooperation

Because of the increased possibility of China's accession to the WTO due to the settlement of negotiations with the U.S. and EU, the world is interested in opening China's domestic market and taking advantage of the opportunities. Existing papers about China's entry into the WTO generally analyze the impact on China and the world economy based on his/her assumption of a hypothetical tariff reduction scenario. However, this paper systematically analyzes by sector and region the tariff reduction structures of 5,685 tariff lines that China will actually reduce up until 2005. Based on this, the author employs a computational general equilibrium model in order to estimate the impact of China's trade liberalization on the economies of Northeast Asia and the world economy. According to the results, China's trade liberalization will bring the greatest benefit to China itself and substantial export expansion for Korea and Japan. This paper also states that if these three countries promote economic cooperation using China's accession to the WTO as momentum, it will be necessary to think economic cooperation in the fiber and clothing industries, which are quite effectively promoting intra-regional trade and absorbing workers left unemployed by structural adjustments in China.