Utilizing Binary Coding to Determine the Impact of Prior Relations on Free Trade Agreement Benefits with China

Abstract

This study aims to uncover the impact of prior relationships (e.g., economic, militaristic) with other countries on China’s approach toward various free trade agreements (FTAs) and their efficacy. While previous literature has examined the efficiency of certain trade agreements on their own or comparatively, they fail to address the effect of prior strained, neutral, or positive relationships on their outcome. Through the linkage of countries’ prior relations and the efficacy of current existing trade agreements, this study identifies the degree to which China values their international partners and enemies (specifically Peru, Costa Rica, Switzerland, Iceland, Australia, and Korea), and whether they purposefully take advantage of non-allied countries in FTAs. In examining GDP growth, political stability, mutual benefit before and after establishing FTAs from the 2010-2015 timeframe, and other indicators, this article determines the efficiency of these FTAs, and draws parallels to China’s prior and current relations with these countries. The results appear to positively correlate levels of past relations and benefit to China and may provide valuable insight into current FTAs in the making, such as the China-Norway FTA and China-Japan-Korea FTA. As China grows stronger, more research must be conducted into its FTA practices to ensure fairness in the international sphere.