The Changing Anatomy of Regional Trade Agreements in East Asia

By Suominen, Kati | Journal of East Asian Studies, January-April 2009 | Go to article overview

The Changing Anatomy of Regional Trade Agreements in East Asia


Suominen, Kati, Journal of East Asian Studies


The recent proliferation of regional trade agreements in the East Asian region can be seen as the most notable development in the region's trading panorama in recent years. Yet, very little is as yet understood about the anatomy of these agreements and, consequently, their full implications to the regional economy. This article strives to fill this gap by analyzing the structure of four dozen RTAs by their various key component parts, including tariff liberalization schedules, rules of origin, and competition policy, customs, investment, and services provisions. The results reveal that intra-Asian RTAs are generally quite rapidly liberalizing, with the exception of agriculture, but they are also quite thin in trade-related disciplines when compared with the more legalistic US trans-Pacific RTAs and those of Mexico and Chile. The proposed Free Trade Area of the Asia-Pacific would inherently be a construct of the political economy interests of these various constituent RTAs.

KEYWORDS: regional trade agreements (RTAs), Free Trade Area of the Asia-Pacific (FTAAP), Asia, United States, trade political economy, tariff liberalization, rules of origin, competition policy, customs, investment, services trade, agriculture

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Regional trade agreements (RTAs) have spread widely around the world in the past twenty years. Today, some 200 RTAs have been notified to the World Trade Organization (WTO), and the number is expected to soar to 400 by 2010. Virtually all countries are member to at least one RTA, and most countries belong to two or more RTAs at once. RTAs have transformed the global economic landscape. Some one-half of global trade is carried out among partners to a common trade agreement; for some countries--such as Chile, Mexico, and Turkey--that have formed RTAs with the main trading powers, the bulk of foreign trade occurs with their trade agreement partners.

Not only has the number of integration schemes grown, but also their content has become more complex and encompassing. Besides market access for goods, most agreements cover several "behind-the-border" issues, such as investment, intellectual property rights, competition policy, and government procurement. Subregional pacts have taken collaboration even further, to issues ranging from macroeconomic cooperation to movement of labor and establishment of common positions in multilateral trade negotiations.

While hugely active in international trade, Asian countries are surprisingly recent entrants to the global RTA chess game. However, Asian countries are rapidly catching up in the global race to integrate. All together, the East Asian economies had notified a total of thirty RTAs to the WTO by September 2008, both with each other and with extraregional players, such as the United States, Mexico, Peru, Pakistan, and Chile. (1)

Indeed, the proliferation of RTAs in the East Asian region can be seen as the most notable development in the region's trading panorama in recent years. Among some examples, China is in talks with such players as Australia, the Gulf Cooperation Council (GCC), Peru, Russia, and India; Japan is negotiating with India and Australia; and South Korea with the European Union, Canada, India, and Mexico. According to an encompassing calculation, East Asian countries had formed thirty-six agreements by the end of 2007 and were negotiating forty-one more, while twenty-five were at a proposal stage (Kawai and Wignaraja 2008).

Asian integrationism has not gone unnoticed. There is a substantial body of political economy literature on Asian regionalism. Perhaps the main forces that are seen as having long held back formal integration in the region include intraregional rivalries and domestic political economy dynamics in several countries. On the one hand, there is entrenched protectionism in the agricultural sector; on the other, there are relatively low intraregional trade barriers in the manufacturing sector. …

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