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ical model used by many scholars to make an analysis.

3.1 The Regional Trade Agreement (RTA）

Ongoing proliferation of regional trade agreements prove that the international trade among closely countries boosted during the past twenty years. One main reason is that the countries in the same RTA are geographically near with each other, such as the three largest RTAs, the European Union (EU), the North American Free Trade Agreement (NAFTA) and the Association of Southeast Asian Nations (ASEAN). Since states in these three RTAs, either they share the same border or are closely to each other, which, to some extent, greatly reduce the costs of transportation as well as avoid risks during trading. Risk here mainly means the natural conditions changing, such as storm or tsunami in the ocean. Besides, in the European Union market, 17 of its members share the same currency which can also contribute to a reduction in transaction cost since the same currency will not be affected by exchange rate fluctuations. Moreover, within the NAFTA, the USA, Canada and Mexico enjoy a zero internal tariff which will greatly improve trade among them. Besides, most nations of ASEAN are developing countries, so that the agreement in this RTA takes the actual situations of these countries better into account. Thus, basing on all those observable benefits we can assume that RTA is a positive variable in the gravity model to estimate bilateral trade between partners. In the empirical analysis, we can have a clear conclusion regarding it.

3.1.1 The China-ASEAN Free Trade Area (CAFTA)

CAFTA is a free trade zone including China and the ten ASEAN countries. It is formerly established in January 1, 2010 but earlier in 2003, China and ASEAN members began to reduce the tariff. During the past ten years, according to the framework of China-ASEAN Free Trade Area Tariff Reduction Plan, all products with MFN tariff rates higher than 15% was decline to 10% in 2004, and 5% in 2005, finally 0% in 2006. For those MFN tariff rates from the range of 5% to 15%, they were dropped to 5% in 2004 and 0% in 2005. And those MFN tariff rate less than 5% products were decreased to 0% in 2004. As the largest FTA of developing countries in the world, after the completion of this FTA, trade in this area could account for over 13 percent of the world trade. Thus, what reasons lead to the formation of the China-ASEAN Free Trade Area? There are mainly two reasons, one is the demand for the development of economic globalization and regional economic integration, the other is the need of closely relation between China and ASEAN. As regional economic integration has developed rapidly and like a storm spreads over the world, many members of the WTO established free trade relations with other countries. Due to China and ASEAN members tend to be developing countries, whose economic power is limited, its economic growth depends greatly on external markets. Thus, if there are any great changes in the global market, it would have a significant impact on these economies. Then the emergence of China-ASEAN is the response to prevent the negative impact of economic globalization and cope with the sharply development of regional economic integration.

4. Data

Many authors employed a gravity model to evaluate how factors such as real gross domestic product (GDP), population, GDP per capita, distance, language, land border, are