Academic journal article East Asian Economic Review

Assessing Liberalization and Deep Integration in FTAs: A Study of Asia-Latin American FTAs*

Academic journal article East Asian Economic Review

Assessing Liberalization and Deep Integration in FTAs: A Study of Asia-Latin American FTAs*

Article excerpt

1. Introduction

This paper conducts a comparative and agreement-level analysis of Asia-Latin America free trade agreements (FTAs). It proposes a comprehensive qualitative framework to studying legal texts of agreements using new criteria to assess liberalization in FTAs in traditional areas (like goods and services) and new trade policy issues relating to regulatory barriers. It then painstakingly applies this framework to analyse all 22 Asia-Latin America FTAs in existence between 2004 and November 2013. The research highlights the best Asia-Latin America FTAs and agreements which deviate from this standard particularly in terms of regulatory issues.

The research seeks to improve our understanding of the contents of FTAs and to contribute to the scant literature on the topic. This exercise goes beyond the bounds of a narrow single discipline based study and inevitably required inter-disciplinary analysis blending concepts and methods in applied international economics and international trade law. New trade policy issues relating to regulatory barriers are defined here as the so-called Singapore issues (investment, government procurement, trade facilitation, and competition policy) and provisions on intellectual property rights (IPRs).

FTAs between Asia and Latin America have increased since the early 2000s as a part of intensifying inter-regional economic ties through trade and investment. Since the landmark Republic of Korea-Chile FTA of 2004, 2-3 FTAs have taken effect every year between countries of the two regions, bringing the total number in existence to 22 (as of November 2013). Furthermore, negotiations for the mega-regional Transpacific Partnership (TPP) are also underway which seeks to promote ambitious preferential liberalization among 12 economies including APEC members from Asia and Latin America. Several factors underlie the increase in Asia-Latin America FTAs. These include: the global rise of large and growing developing economies in both Asia and Latin America, the spread of global production networks and supply chain trade, the need to reduce trade and investment barriers, the stalled WTO Doha Round, and the pursuit of geo-political interests by major economic powers (ADB and IDB, 2009; ADB, ADBI, and IDB, 2012; Kawai and Wignaraja, 2013).

Growing Asia-Latin American economic ties have attracted attention in the literature on regional economic integration. Research has identified important issues in the economic relationship between Asia and Latin America including drivers of inter-regional integration, the pattern of specialization in production and trade, tariffs and other barriers to inter-regional integration, the impact of competition from the PRC on manufacturing in Latin America, and trade policy responses of Latin American governments to imports from the PRC and India (for a sample see Chami-Batista, 2004; Devlin, Estevadeordal, and Rodríguez-Clare, eds., 2006; Jenkins, Peters and Moreira, 2008; Medalla and Balboa, 2010; and Facchini, Olarrega, Silva, and Willmann, 2010; Rosales and Kuwayama, 2012).

However, relatively little attention has been given to liberalization under inter-regional FTAs. The few exceptions include a study on the economic implications of large inter-regional FTAs between Asia and Latin America using a computable general equilibrium model which reported gains for both regions under different scenarios (Krasniqi, Bouet, Estrades, and Laborde, 2011). Some studies have explored the evolution of trade agreements between the two regions (Medalla and Balboa, 2010; Rosales and Kuwayama, 2012). Other studies have explored the drivers and content of inter-regional FTAs (e.g., ADB and IDB, 2009; Estevadeordal and Suominen, 2006; Estevadeordal, Harris and Suominen, 2009; Gonzalez-Vigil and Shimizu, 2012), but more work is needed on liberalization under recent agreements focusing on new trade policy issues relating to regulatory barriers.

The remainder of the paper is as follows. …

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