Catching Up or Falling Behind
Chapter 9: East Asian Economic Integration and its Impacts on Regional and Global Economies
The trade–investment nexus that has developed since the Plaza Accord has generated intra-industry trade and enhanced mutual interdependence among trade-dependent countries in East Asia, as discussed in Chapters 7 and 8. The development of competitive trade liberalization in the past three decades has not only led to more free trade regimes in the region than ever before, but has also resulted in more preferential trading arrangements in the region. In addition to numerous bilateral free trade agreements (FTAs), there are quite a few multilateral FTAs and many more ongoing multilateral trade negotiations under way in the region. Among them, the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) was signed in January 1992 in Singapore by six original members – namely, Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand – to create a trade bloc in the region. AFTA now comprises ten countries of ASEAN.1 While open regionalism is the goal of the World Trade Organization (WTO) trading framework, from which many countries have benefited, the deadlock of the multilateral trade liberalization under the Doha Round and the slow pace of a region-wide trade pact such as the AsiaPacific Economic Cooperation (APEC)-FTA have pushed the East and South East Asian countries to seek alternative avenues for regional trading arrangements (RTAs). After the 1997–1998 Asian financial crises, East Asian countries tended to engage in more and more RTAs. As a result, there is a proliferation of the bilateral and multilateral RTAs, which could lead to several trading blocs...
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