A Comprehensive Introduction to Regional Issues
Edited by Masahisa Fujita, Ikuo Kuroiwa and Satoru Kumagai
Chapter 12: Institutions and Policy Coordination for Further Integration
12. Institutions and policy coordination for further integration Daisuke Hiratsuka 12.1 INTRODUCTION With the most-favored nation (MFN) tariff rates remaining at a significant level, the majority of East Asian countries have implemented investment promotion schemes which grant import tax exemptions to intermediate goods intended for export. The import tax exemption scheme, however, is cumbersome for firms because they are compelled to employ persons to prepare documents. Also, the scheme is suspicious because it appears to be in opposition to the General Agreement on Tariffs and Trade (GATT), Article I, General Most-Favoured-Nation Treatment, in which the MFN tariffs are to be accorded unconditionally to the products originating in and destined for all parties to the agreement. East Asia must put into practice the WTO’s consistent, transparent and nondiscriminatory trade-related measures. One such measure is to extend regional trade agreements (RTAs), one of the WTO’s consistent trade liberalization tools. Until the end of the 1990s, however, there were no RTAs in East Asia, except the ASEAN Free Trade Area (AFTA) and the Closer Economic Relations (CER) between Australia and New Zealand. Subsequently, the Singapore–Japan Economic Partnership Agreement opened up the path for RTAs to spearhead trade liberalization in the region. Currently in fact, there are more than thirty RTAs enforced involving East Asia, of which fourteen are intra-regional RTAs, either bilateral agreements or plurilateral agreements. So, a question arises. Will the proliferation of FTAs be good for East Asia? To rephrase this, will East Asia benefit from the proliferation of FTAs...
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