In this report, we shall explore the reasons for the shift from multilateralism to bilateralism, which is rapidly emerging in the wake of the 1997-98 economic crisis and we shall also focus upon the role of regionalism in East Asia in recent years.
Chapter 1: Introduction
Since the 1997-98 financial crisis, a new trade arrangement has begun to emerge in East Asia that represents a clear break from the region's strong history of multilateralism. The countries of East Asia are now giving more attention to ways of expanding intra regional trade that include the establishment of regional trade agreements; plans to establish a free trade area involving the economies of ASEAN and China; as well as moves towards bilateral trade agreements. Such a development is important given that an export-led growth and development strategy has provided the platform for the region's remarkable and prolonged period of high and sustained economic growth since the 1960s. Thus this trend towards bilateralism and the new regionalism, the motivations behind them, their impacts upon the region, their future evolutions and prospects are of profound regional and also global significance.
Therefore in this report, we shall explore the reasons for the shift from multilateralism to bilateralism, which is rapidly emerging in the wake of the 1997-98 economic crisis and we shall also focus upon the role of regionalism in East Asia in recent years. In doing so, the report will proceed as follows. Chapter 2 presents a brief background on the Asian Financial Crisis. Chapter 3 looks at the trade arrangements in East Asia before 1997. Chapter 4 discusses the reasons for shift from multilateralism to bilateralism. Chapter 5 looks at the new trade approach after 1997 and its impacts upon the region. Chapter 6 focuses on regionalism and its progress so far in East Asia. Chapter 7 elaborates on the various roles of regionalism, emphasising on its importance especially after the crisis. Last but not least, chapter 8 will discuss the effects of regionalism in East Asia before we present our concluding remarks in chapter 9.
Chapter 2: 1997-98 Asian Financial Crisis1
The financial and economic crisis of Asia in 1997 struck East Asia, bringing an end to its miracle and the myth of its growth. The confidence level in East Asia then declined to a new low in the short aftermath.
This financial turmoil arose out of a twin crisis, combining an externally driven currency with an internally induced banking crisis. Originating from Thailand, the crisis quickly spread to other East Asian countries. In early July 1997, Thailand had to devalue its currency, the baht by about 20% against the US dollar, as a result of intense pressure in the foreign exchange market. Currency speculators and many Thai residents were trying to sell the baht and buy the US dollar, as the Thai government was running out of its foreign reserves and was also losing market confidence in maintaining the currency value and financial stability. This resulted and worsened the capital flight out of the country. Interest rates then shot up, leading to the collapse of previously inflated stock and real estate markets. Thailand thus faced its worst recession in the post-war period with sharply rising unemployment and business failures.
Other neighbouring countries were not spared too, as the devaluation of the baht made Thai exports cheaper, pressuring other currencies to follow suit2. This led to subsequent turmoil in the financial markets and the economy of several East Asia countries3, especially Indonesia and South Korea.
From the speed of spread of this economic crisis, the depth of interdependence among East Asian countries is clearly revealed. Each country thus becomes more aware of the need to establish meaningful trade agreements, so as to facilitate the exchange of information and thereby promoting cooperative actions among them.
Chapter 3: Trade Arrangements in East Asia before 1997
Until the Asian crisis erupted in 1997, East Asia is comprised of countries that did not show much interest in forming preferential trade arrangements, whether intra- or inter-regionally. Preferential trade just represented a mere 3% of the total trade for Asia. East Asian countries instead pursued a multilateralism approach to trade throughout the post-war period under the GATT/WTO regime, unlike Western European countries and the United States.
One such arrangement is Asia-Pacific Economic Cooperation (APEC), which is formed in 1989 by 21 nations4 from three continents. It accounts for more than 2.5 billion people, a combined GDP of 19 trillion US dollars and 47% of world trade. The member economies of APEC seek to create efficient domestic economies and increase exports by reducing their tariffs and other trade barriers. For instance, Japan supplies the essential capital goods, while Hong Kong, Taiwan and Singapore provide finance, design and marketing expertise. Thailand, China and Indonesia on the other hand focus on labour-intensive operations. This arrangement in turn allows APEC member economies on average to enjoy lower cost of living because of the reduced trade barriers and a more economically competitive region.
The next form of multilateral trade agreement entered into by East Asian countries is ASEAN Free Trade Area (AFTA), which is initiated in 1992. It has 10 members, consisting of Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Lao, Myanmar and Cambodia. The members seek to eliminate non-tariff barriers and quantitative restrictions, harmonize customs nomenclature, valuation and procedures and also to develop common product certification standards. It is hoped that with ten integrated markets of a population exceeding half a billion people, the member countries will be much more attractive for large-scale direct investment, as compared to a collection of relatively small, segmented markets.
Several East Asian countries5 also joined the World Trade Organisation (WTO) and signed the General Agreement on Tariffs and Trade (GATT), which was designed to provide an international forum that encouraged free trade between member states by regulating and reducing tariffs on traded goods and by providing a common mechanism for resolving trade disputes.
Chapter 4: Reasons for Shift from Multilateralism to Bilateralism
As mentioned above, East Asian financial crisis demonstrated the risks of contagion in financial market and exchange rate instability. This arose from the high economic interdependence of the region. The crisis showed that rapid deceleration of one country's currency could adversely affect the export competitiveness of other neighbouring countries exporting the same products. The policies initiated by IMF to ease the crisis only seek to open up Asian market for Western firms and protect the interest of Western lending institutions at the expense of Asian workers. This spurred great dissatisfaction among Asians. Coupled with the fact that export growth will remain a key factor for the post-crisis recovery and greater economic growth and welfare of the region, East Asian countries are now exploring new forms of economic cooperation to increase trade and home-grown defences so as to reduce the risks of financial contagion and exchange rate instability.
In order to increase trade, East Asian countries can engage in multilateral trade. However, multilateralism system is not making much progress. Since the set up of WTO, it has not been able to solve problems in the way of global free trade. In 1999, failure of WTO in Seattle to solve deep difference on farm subsidies and labour standard between 135 member nations illustrated the difficulty of comprehensive multilateral liberalisation of market access. This is further illustrated by the difficulty of reaching an agreement at Doha, in which WTO abandoned the March 31 2003 deadline for an outline agreement on Farm trade and also the current collapse of World Trade talk to free up world trade. Since WTO failed to solve these problems, East Asian countries have to look into regional or bilateral agreements to increase trade.
Morover, APEC has made little accomplishment, as membership only requires a verbal commitment to reform and cooperate and such is not enforceable. There are no formal agreements, and each state progresses at its pace within self-determined parameters. APEC thus has failed to promote economic reform or lower trade barriers because it is committed to "concerted unilateralism" or the notion that members will undertake agreements unilaterally, rather than negotiate formally and sign treaties. There is little incentive for countries to reduce informal trade barriers because negotiation and pressure are deemed too confrontational. APEC thus symbolized the old approach to economic cooperation in Asia, which emphasized informal cooperation and consensus building. Dramatic economic growth before the crisis papered over the drawbacks of this approach. Hence once the economic crisis set in, cooperation vanished. Failure of APEC to play an significant role in responding to the crisis and frustration of the ineffectiveness of trade liberalisation cause East Asian countries to look into bilateral trade agreements.
Another reason that caused East Asian to shift to bilateralism is the unimportant regional trade agreement (RTA) in Asia. Intra-ASEAN trade among the ASEAN-6 rose from US$24 billion in 1985 to US$143 billion in 1997, with most of the intra-trade taking place between Singapore and Malaysia. This is only an inched up from 18% of total trade in 1985 to 20% of the total trade in 1997, which is considered very low. As mentioned above, in 1993-97, preferential trade only represented 3% of the total of Asia. This is due to the diverse economic goals, culture and living standard in Asian countries. Moreover, since liberalisation in Asian countries had been successful without the need to change their economic institution, they have been generally distrustful of regional agreements, which are deemed to be less successful.
After the financial crisis, East Asian countries want to reduce the risk of financial contagion and exchange rate instability and also to increase their export growths. However the failure of WTO and little accomplishment of APEC and RTA make it difficult for East Asia to increase its trade, hence explaining its shift from multilateralism to bilateralism after the financial crisis.
Chapter 5: Bilateralism - The New Approach
With the need for speedy recovery and building up of national security post the 1997 financial crisis, East Asian countries have observed a major development of regionalism, termed as 'new regionalism', in its region. This new regionalism mostly comes through the approach of bilateral agreements, both inter- and intra-regional6. Table 6 shows a list of proposed and actual regional trading arrangements undertaken by some East Asian countries. Singapore has been one of the countries that is most aggressive in initiating bilateral agreements with other countries and parties inside and outside the East Asian region and will be even seeking more of them following the recent breakdown of the WTO talks in Cancun, Mexico.
Bilateral trade has some advantages over multilateral trade and can even complement regional trade. Bilateral agreements like FTA and Closer Economic Partnership (CEP) as compared to multilateral agreements such as WTO are easier to deal with since it involves only two parties. The large size of the WTO means its negotiations are harder to start and finish. On the other hand, bilateral arrangements are less time consuming and complicated. It can be said bilaterals provide a "fast track alternative to WTO". Countries that are prepared to embrace trade liberalisation now are able to proceed faster with bilateral arrangements. Other countries can access the bilaterals at a later stage when they are prepared to undertake the rights and obligations involved.
Bilateralism can also be regarded as the building block for further multilateral liberalization. Bilateral agreements between one East Asian country and a non-East Asian trigger similar initiatives by other individual East Asian countries with non-Asian countries. One such example would be the New Zealand - Singapore CEP Agreement. The initiation of such bilateral agreement is referred to by Singapore's Prime Minister, Mr Goh Chok Tong as an "intention to spin a web of interlocking free trade agreements between APEC members, which could help to move the organization toward achieving free trade in the Asia Pacific." (2000) Hence, with the implementation of the Singapore- New Zealand CEP agreement in 2001 and more recently the Singapore-USA FTA, in 2003, these moves can induce other Asian countries to start their own negotiations with other countries so that they will not be at the losing end.
If such similar trade agreements are to be set up within Asia and its major trading partners, it will not only create free trade within Asia, but also between Asia and its trading partners which includes countries on the other parts of the globe. In other words, bilateral FTAs or sub-regional FTAs between East Asian countries will also help retain foreign investors in AFTA, which would be seen as a single market by investors. Hence, this will not only complement AFTA implementation but also extend East Asia's outreach to the rest of the world. Additionally, these Asian trading ...
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If such similar trade agreements are to be set up within Asia and its major trading partners, it will not only create free trade within Asia, but also between Asia and its trading partners which includes countries on the other parts of the globe. In other words, bilateral FTAs or sub-regional FTAs between East Asian countries will also help retain foreign investors in AFTA, which would be seen as a single market by investors. Hence, this will not only complement AFTA implementation but also extend East Asia's outreach to the rest of the world. Additionally, these Asian trading partner countries may be in other forms of economic integration or agreements. The earlier mentioned Singapore-USA FTA whereby USA is both a major trading partner of Singapore in the electronics industry and a member of NAFTA demonstrates this.
This brings in the notion of bilateral agreements complementing RTAs. That is, they allow a regional trading area to expand consequentially and, in some cases, they allow two or more blocs to coalesce. While it may not be in the interests of a set of countries collectively to admit a new member, it may in the interest of one member to engage in bilateral agreements with an outside country. When this happens, there is greater incentive for other members to form bilateral agreements with the outside country. In turn this may improve the benefits to members admitting the country to membership or, in cases where the outside country is itself a member of another RTA, a bilateral agreement could lead to coalescence of two areas. In this context, the Singapore-USA FTA, for example, in the long run can in fact coalesce the AFTA and NAFTA and create a bigger free trade area, one more further step towards global free trade: the 'grand coalition'. This is because when Singapore, a member of the AFTA formed a free trade agreement with USA, a member of the NAFTA, the other members from both parties will naturally be more aware of each other in terms of what each country can offer to other countries and thus may express interest to negotiate more bilateral trade agreements across these two free trade agreements which, in the end, can lead to coalescence. Another illustration of such possible happening is the implemented Singapore-EFTA FTA in 2003.
Even if coalescence may not happen, the existence of many RTAs around the world such as AFTA, NAFTA, EFTA and many more, make bilateral agreements needed for supplementation of their formations to link all of the countries between which there is no free trade.
One way of measuring crudely the significance of bilateral agreements to East Asian countries is to review its impact on trade of these economies since the shift of multilateralism to bilateralism after the financial crisis.
Chart I
Merchandise trade of Asian economies in financial crisis, 1995-00 (year to year % change)
As shown from the chart above, total trade of Asian economies have significantly improved from negative percentage changes during the crisis to large positive changes after that. This is largely due to the proliferation of RTAs in terms of bilateral agreements initiated by East Asian countries with countries inside and outside the region. This phenomenon is further illustrated by the figures in the table below which indicated that on the overall both East Asian intra- and inter-trade, in $billion and as a percentage of world trade, showed increases in the post crisis period from pre crisis period.
Table I The Relative Importance of East Asia and Other Regions in World Trade
Group
Total Exports ($ billion)
Share of World Trade (%)
975
985
995
2001
975
985
995
2001
Australia/New Zealand
4.7
32.6
70.1
84.6
.8
.6
.4
.3
East Asia1
44.5
86.2
839.0
194.4
5.4
9.4
6.3
8.7
ASEAN
22.0
72.0
307.8
403.8
2.7
3.6
6.0
6.3
European Union (15)
325.3
711.6
893.4
2194.8
39.2
36.0
36.9
34.3
Japan
49.1
90.3
476.1
448.6
5.9
9.6
9.3
7.0
Latin America
45.3
15.8
245.3
382.1
5.5
5.9
4.8
6.0
Middle East
84.7
09.1
55.1
247.8
0.2
5.5
3.0
3.9
NAFTA
48.9
351.9
922.4
214.7
8.0
7.8
8.0
9.0
North Africa
3.4
29.4
33.9
49.3
.6
.5
0.7
0.8
Other Europe-Cent. Asia2
40.5
28.7
244.7
340.7
4.9
6.5
4.8
5.3
South Asia
6.2
6.5
52.0
70.3
0.7
0.8
.0
.1
Sub-Saharan Africa
28.9
52.8
74.7
01.2
3.5
2.7
.5
.6
MEMO ITEM
East Asian Intra-Trade
8.0
44.1
314.5
418.0
.0
2.2
6.1
6.5
East Asian-Japan Trade
1.3
35.3
18.7
44.9
.4
.8
2.3
2.3
East Asia-China Trade3
0.4
5.9
43.5
83.5
..
0.3
0.8
.3
East Asia-Rest of World
36.5
42.1
524.5
776.4
4.4
7.2
0.2
2.1
NAFTA Intra-trade
55.6
59.5
396.0
646.5
6.7
8.1
7.7
0.1
EU (15) Intra-trade
200.2
416.9
168.5
296.6
24.1
21.1
22.7
20.2
MERCOSUR Intra-Trade
.0
2.0
4.5
6.6
0.1
0.1
0.3
0.3
ASEAN Intra-trade
2.5
1.3
64.6
74.2
0.3
0.6
.3
.2
WORLD EXPORTS
829.2
975.9
5137.3
6403.1
00
00
00
00
East Asia is defined here as consisting of Brunei, Cambodia, China, Republic of Korea, Hong Kong, Indonesia, Lao PD, Malaysia, Mongolia, Philippines, Singapore, Taiwan (China), Thailand and Vietnam.
2 The totals for this group exclude Western Europe.
3 The totals are based on 1978 Chinese trade data since 1975 statistics were not available from IMF records.
Source: International Monetary Fund Direction of Trade Statistics
For a more specific analysis, a case study on Singapore is done and the effect of the Singapore-EFTA FTA implemented in early 2002 is reviewed.
The chart below indicates significant rise in trade activities between Singapore and the countries in EU since 2002 with 14.2 billion euro worth of exports and 13.0 billion euro worth of exports as compared to the period before there was a FTA agreement.
Chart II
Sources: EUROSTAT (COMEXT, CRONOS), IMF (DOTS), WEFA (WMM)
Following this Singapore-EFTA agreement and other FTAs that have been already signed with New Zealand, Japan, Australia and USA, Singapore also intends to sign similar accords with Canada, India Chile, Jordan and South Korea. Its Minister for Trade and Industry, Mr George Yeo said, "These FTAs give our companies better access to overseas markets for their goods and services...With the collapse of the recent WTO talks in Cancun, FTAs have become even more important to us." He further added that the force of globalisation could not be sidestepped, "whether we like it or not". "Instead of avoiding the gaze of globalisation, we should look it in the eye," BG Yeo said. (2003)
The outcome of these FTAs undertaken by Singapore have been positive so far and is reflected on the table below which shows a significant rise of total trade to 7.4% (at 1995 prices) in 1999 as compared to -6.7% during the Asian financial crisis. This was followed by an even further increase of 5.3% to a figure of 14.8% in 2000. In 2001, however, there was a short fall as the annual growth in external trade dipped back to negative figure due to the downturn of the US economy as a result of the September 11 tragedy. Nonetheless, the following year exhibited another positive growth in external trade, implying that on the overall the FTAs have given benefits to Singapore.
Table II
Annual Growth in External Trade (%) at 1995 Prices
Year
Total Trade
Exports
Imports
990
2.4
9.3
5.1
991
9.1
1.7
7.0
992
7.0
7.6
6.5
993
8.1
7.2
8.9
994
20.6
27.6
4.7
995
5.1
6.4
3.9
996
9.9
0.2
9.6
997
0.9
1.6
0.2
998
-6.7
-0.3
-12.9
999
7.4
5.4
9.5
2000
5.8
6.8
4.8
2001
-10.4
-8.6
-12.4
2002
2.9
4.4
.2
Source: Singapore Department of Statistics
However such moves taken by Singapore have raised some concerns by the regional countries. Other Asian political and business leaders argue that the bilateral FTAs could impede efforts toward a more liberalised global trading regime by acting in the interests of specific nations, rather than the region as a whole. Given the diversity of Asian countries and their individual sensitivities, any bilateral FTA signed by a specific nation would also contain differences in its coverage, rules and regulation when compared to a FTA signed by another nation. They may not also be consistent with the FTA negotiated between ASEAN as a region and any of its dialogue partners. The outcome would be difficulty in managing ASEAN external trade relationship and increased cost of doing business as investors and traders will have to deal with differences in scope and speed of tariff reduction and rules and regulations. Thus this would hinder ASEAN integration effort and affect AFTA's credibility.
There is also the risk of the creation of back-door problem whereby unauthorised goods slip into the ASEAN markets through countries having bilateral agreements with outside country, escaping the charges and regulations of the regional market as a whole. This is because any goods that have 40% local content must be regarded as national and only then can enter the markets of other member countries. With member countries having bilateral arrangements with outside countries, there are easier chances for foreign goods to enter the ASEAN markets illegally, escaping the proper tariffs and taxes, by the back door of member countries that form FTAs with them.
Another reservation toward bilateral FTA is the fears that countries that are unattractive FTA partners may be left behind in a global trading environment dominated by bilateral agreements. The new regionalism, mainly through bilateralism has created unequal access to world markets. Most of the bilateral agreements are between developed countries or in the case of the East Asia region, none of the agreements links a Less Developed Country (LDC) to a Developed Country (DC). LDCs make less attractive partners because of their smaller markets, demands for unequal transition periods and general reluctance to accept commitments to deep integration. In particular to East Asia region, most countries, with the exception of Singapore, Japan, Hong Kong and China are developing countries with small markets with no form of any bilateral agreements. Hence, in this case, bilateralism may instead be a stumbling bloc for global free trade.
Chapter 6: Regionalism and its progress in East Asia
Regionalism refers to formal economic cooperation and economic integration arrangements, and agreements between two or more countries that are designed to achieve economic growth through trade and investment liberalization and facilitation.
There has been an increase in the number of proposals for new preferential arrangements, both bilateral and regional, in East Asia. Countries that were formerly against the preferential route to trade liberalization such as China, Japan and Korea, are now actively considering moves in this direction. The most significant of the new initiatives is the China-ASEAN Free Trade Area now under negotiation. In November 2001, ASEAN leaders and Chinese Premier Zhu Rongji endorsed the establishment of a free trade area between China and ASEAN economies within 10 years. This will be the world's biggest free trade area, encompassing 1.7 billion people, a collective income of US$ 2 trillion and intra-regional trade of US$ 1.2 trillion. Other regional trading arrangement under negotiation include the East Asia Free Trade Area proposed at a summit meeting of ASEAN Plus Three in year 2000 and Northeast Asian Free Trade Area (China, Japan, Korea).
Chapter 7: Role of Regionalism in East Asia
The 1997 financial crisis was highly contagious in the region both through the usual trade and financial channels and through herd behavior among investors. On the trade side, the rapid depreciation of one country's currency could adversely affect the export competitiveness of other countries, especially neighbors producing the same products for the same export market. The speed of the crisis spreading inside Asia illustrated the depth of economic interdependence among Asian countries. Hence there is a clear need for establishing a strong surveillance system at the regional level to detect signs of a crisis at an earlier stage and reduce its severity should it occur. Such a relation will lead to deep and fast exchange of information, which promotes cooperative action among them. Greater integration within the region is important and necessary as a countermeasure against any crisis.
In response to the financial crisis in Asia, the International Monetary Fund (IMF) acted as an international lender of last resort. The IMF had instituted the largest bailout in its history with the loans of US$ 54 billion to South Korea, US$ 40 billion to Indonesia, US$ 17.2 billion to Thailand and US$ 1 billion to the Philippines. Also, the policies recommended by the IMF, such as tightening monetary policy and curtailment of government budgets, were not useful in the context of the Asian Financial Crisis. In fact, it caused economic depression to accelerate. These approaches to the crisis taken by the IMF have been heavily criticized. The perception that the IMF was acting to protect the interests of Western lending institutions and to open Asian markets for western firms at the expense of Asian workers and the sovereignty of Asian countries was widely held in the region. Asian leaders no longer trust the U.S. or other international institutions for protection. Regionalism aids East Asia to raise its voice in the global world and attempt to seek its own 'made-in-Asia' solutions and independent actions in certain cases.
Regionalism offers opportunities to build a sense of community or to repair past tensions between neighboring economies. For example, the ASEAN plus Three members started scheduling not just summits but also regular meetings of senior officials, ministers, and leaders. The subjects on the agenda have become increasingly comprehensive, ranging from trade liberalization and monetary and financial affairs to e-commerce and the environment. This offers a chance for deeper interaction between countries.
An important development in East Asia is the rapid rise of the China economy. China was able to sustain an economic growth rate of 7-8% even in the midst of the crises elsewhere in the region, and it continues to record rapid expansion in both trade and inward investment. Over the decade 1990-2000, average real growth rate in China was 10% annually. Exports quadrupled from US$ 62 billion to US$ 250 billion. Hence there is a need by other economies in the region for stronger cooperation with China, both as a growing import market and as a rising competitor in export markets. There is great growth potential in China. Hence regionalism opens up new opportunities for countries in the region to venture into the China market at favorable terms.
Chapter 8: Effects of Regionalism on East Asia
One of the positive effects of the 1997 financial crisis was to stimulate a nascent sense of East Asian regionalism although it had negative effects in the short term. In the long run, it brought ASEAN as a grouping closer together, as well as Northeast and Southeast Asia. There are a number of reasons to welcome a more developed system of cooperation in East Asia. Interdependence in finance, trade and investment has been increasing. Potentially, regionalism assists the nation state in dealing with these phenomenons and in addressing some of the negativities of globalization.
8.1 Short /Medium Term Effects
First, regional integration has clearly intensified crisis contagion effect. Pure contagion refers to the fact that institutional investors, such as mutual funds, insurance companies, pension funds and hedge funds, tend to lump together sub-regions and countries in emerging markets, regardless of the specific economic soundness of the respective sub-regions and countries. There are also spillover: (1) some countries have to apply competitive devaluations to remain competitive respective to similarly-exporting and currency-battered countries; (2) intraregional trade and investment interdependencies mean that crisis are transmitted through less exports, more imports and less investments to and from the region; and (3) foreign investors tend to make portfolio adjustments due to the fact that losses in one market lead funds to liquidate investments in other regional markets.
Second, regional responses to the crises have been failures. Japan's early proposal for an Asian Monetary Fund (AMF) was dismissed due to strong resistance from the US and the IMF. ASEAN was unable to deliver a quick and effective response to the crisis in Thailand and Indonesia.
Third, regional economic integration, in a context of a general slump, strictly limits the domestic effects of national expansionary macroeconomic policies. For instance, as Malaysia departed from the IMF prescriptions, while Thailand and Indonesia did not, its expansionary fiscal and monetary policies tended to result in themselves into more imports from neighbouring economies, into a higher trade deficit and therefore into additional restrictions on economic recovery. A viable alternative should have been a regional concerted effort to decrease interest rates and to provide fiscal stimuli, as suggested by the World Bank (1998).
Fourth, the post-crises scenario might result in national governments having second thoughts on further trade and financial liberalization, as its premature and indiscriminate implementation in 1990-1996 was a major factor of the turmoil. This may provoke a fatal blow not only to the opening trend respective to the global economy but also to the ongoing process of trade-barriers dismantling and financial opening in ASEAN and APEC.
8.2 Risks
In addition, we should also note the risks entailed in economic integration. Preferential agreements carry risks, one of which is that trade may be diverted away from more efficient non-members to less efficient members. If a preferential agreement diverts more trade than it creates, it will yield smaller efficiency gains than would multilateral liberalization. The larger the difference between the preferential RTA tariff and the external tariff imposed on imports from non-members the greater the trade diversion effect. Trade may also be diverted if members of a free trade area impose rules of origin, since these may cause imports to be redirected through the member country that has the lowest external tariff.
8.3 Long Term Economic Benefits
The economic benefit of a preferential trade agreement is the economic efficiency gains from trade liberalization. A member country will allocate resources to sectors in which it has a comparative advantage vis-à-vis other members, and trade is created. The greater size of the combined market can also contribute to economies of scale and attract foreign direct investment, though since the benefits depend on the size of markets as well as on the producers in the Regional Trading Agreement (RTA)), they vary widely across countries.
Other than the traditional economic benefit of greater efficiency, countries enter into RTAs for many development-related reasons. Such arrangements offer the chance to create larger regional markets that are more attractive to foreign investors; to sequence liberalization by opening up in stages and to pursue structural change jointly with other members. Liberalization, trade facilitation, and structural reform are often thwarted by vested interests, and regional cooperation for the joint promotion of these processes can make them easier to achieve. For smaller states like those in East Asia, RTAs also offer the opportunity to build capacity in trade negotiations.
8.4 Economic Effects of East Asian Regionalism
Studies have shown eight potential Free Trade Agreements in East Asia and estimated their economic effects. First, the economic effects of the three bilateral FTAs in Northeast Asia (China-Japan FTA, China-Korea FTA, Korea-Japan FTA) and a trilateral FTA in Northeast Asia (Northeast Asian FTA: NEAFTA) are estimated. Subsequently, the case in which a bilateral FTA is concluded between Southeast Asia's AFTA and a Northeast Asian country (e.g., China-ASEAN FTA) and the case in which the whole of East Asia establishes one FTA (EAFTA) are examined. For each supposed FTA, effects of trade liberalization ("TL") and effects of capital accumulation in addition to the effects of TL are estimated ("TL&CA").
Table 7 presents the effects of the impact of eight FTAs on each regional GDP. According to the findings, while the eight FTAs will bring economic benefits to all member countries, non-members will suffer a loss. For example, if Korea and Japan conclude an FTA, the GDP of the two countries would increase while that of non-member countries, like ASEAN or Rest of World (ROW) could decrease.
While the economic effects of TL alone are moderate, introducing capital accumulation (CA) effects expands the economic benefits. If the economic effects are estimated under the scenario of a China-Korea FTA, the GDP of China and Korea would increase by 0.12% and 0.76% respectively, considering the effects of TL only. When the effects of both TL&CA are considered, the GDP of China and Korea would increase by 0.45% and 1.76% respectively. In this case, capital accumulation is achieved through increased savings and active investments in the homeland as well as expanded investment in the businesses of the other.
Under Northeast Asian regionalism, Korea is expected to gain relatively more economic benefits compared to China or Japan. Korea is forecasted to gain relatively more benefits from an NEAFTA as well as from a bilateral FTA with China or Japan. Like other FTAs, it is estimated that greater benefits would be generated by capital accumulation effects than trade liberalization effects under an FTA with Japan. This could be because Japanese capital would be invested in Korea, increasing Korea's growth potential.
The impact of East Asian regionalism on regional exports and imports are arranged in Table 8 and Table 9. The estimated value is each region's total exports to the world.
In general, the exports of FTA member countries will increase, while non-members' exports will decrease. Non-members will be at a disadvantage as a result of the trade diversion. In the case of a China-Japan FTA, while the exports of China and Japan are estimated to increase by 4.64% and 1.64% respectively, Korea's exports are estimated to decrease by 0.17%. Meanwhile, non-member countries' exports may increase in certain cases, unlike the GDP and welfare levels. For example, the exports by ROW, the non-member regions, will increase by 0.03% under an NEAFTA. When the three Northeast Asian countries conclude a trilateral FTA, the exports of ROW, including developed countries like the U.S. and EU, will improve while it will not happen under an East Asian FTA. Also Japan's exports may increase with a China-Korea FTA and Korea-ASEAN FTA. The phenomenon of Japan's increasing exports with Korea's FTA with other regions could be explained by Korea's high dependency on Japan for machinery and intermediate inputs.
Under a Northeast Asian FTA, Korea will record the highest growth rate in GDP and welfare level, while China's exports will increase the most. Meanwhile, the export performances of non-members like ASEAN and ROW are anticipated to decline. Under an EAFTA, China is forecasted to record the highest growth rate of exports, increasing by 8.79%. Following China, ASEAN is estimated to increase its exports by 7.88%.
As trade barriers are eliminated and income level is increased, imports of FTA member countries will be activated. Contrary to the case of exports, while FTA member countries' imports increase, non-member countries' scale of imports will decrease. This is because the non-member countries will curtail their imports due to the reduction of income.
The establishment of East Asian regionalism is anticipated to have a great impact on the production of countries within the region. Among the eight FTAs studied, the effects of an NEAFTA and an EAFTA on production sectors in ASEAN and the three Northeast Asian countries are presented in Table 11. Under a Northeast Asian FTA, Korea's industries will be affected the most. Among China's industries, the clothing, electronic products and agricultural sectors will expand while the automobile and metal industries will be reduced. While Japan's production in the textile, machinery and metal industries will expand, in the industries of clothing, other transport equipment, and agriculture production will decline. Most of the industries in ASEAN and countries, which are not members of the Northeast Asian FTA, will also undergo a decrease in production.
The establishment of an EAFTA is forecasted to have similar impact on the industries of the three countries, as with the NEAFTA. However, the impact on each industry will differ depending on the ASEAN country's industrial competitiveness. Also, as the price of imported raw materials decreases, export prices will declines leading to an increase in exports to non-member countries. The demand increase, if sufficiently high, can push all member countries to increase their production of the item.
Overall, the findings show that member countries would benefit from both bilateral FTAs and regional FTAs, like an NEAFTA and an EAFTA. Also, evidently, there is no doubt that a China-Japan-Korea FTA will boost the economic systems of the three countries, keeping them close to each other through economic integration while aggressively participating in the trend of regionalism. This will result in substantial economic gains to member economies.
Thus, despite the short-term negative effects and risks entailed, there are many other long term benefits and economic effects of regionalism on East Asia on the whole.
Chapter Nine: Conclusion
No country in East Asia was spared totally of the contagion effect of the 1997-98 economic crisis. This shows that no one country can overcome this problem single-handedly and thus it inevitably warrants intensified cooperation more than before among all the East Asian communities.
As discussed above, East Asian countries have gradually moved towards regionalism and bilateralism after the financial crisis and this trend is likely to persist. Regionalism can come through the approach of bilateral agreements and in the first section, the reasons for the shift towards bilateralism were examined. The driving forces behind this have been the 1997-98 financial crisis which demonstrated the need to reduce the risk of financial contagion and exchange rate instability due to interdependency of the region; the failure of WTO; little accomplishment of APEC and unimportant RTA.
In the later section, the roles and effects of regionalism were investigated. Regionalism acts as a strong surveillance system at the regional level, attempts to find its own solution within the region in different circumstances and create a sense of community in the region. Although regionalism does create short-term negative effects and risks, the long term benefits and economic effects will cause East Asian countries to gain on the whole.
The question of whether bilateral and regional trade aids or hinders global trade liberalisation was also examined above. It can be a positive force and complements global trade liberalisation or become a disruptive force and threaten global trade liberalisation. It depends on the policies of East Asian countries and the world's reaction to the policies. In our opinion, if countries want to benefit from global trade liberalisation, government should set policies that complement global trade, hence bilateralism and regionalism should aid in global trade liberalisation.
However, regionalism in East Asia is still considered at its early stage and its precise shape still remains vague. In the foreseeable future, if the ASEAN+3 is converted to a sort of East Asian Community, a full-fledged East Asia free trade will be formed and it could be ranked alongside with EU and NAFTA in size, transforming the world into a tripolar economy (Bergsten, 2000).
Appendices
. Chronology of the Asian Financial Crisis
* Early May (1997) - Japan hints that it might raise interest rates to defend the yen. The threat never materializes, but it shifts the perceptions of global investors who begin to sell Southeast Asian currencies and sets off a tumble both in currencies and local stock markets.
* July 2 - After using $33 billion in foreign exchange, Thailand announces a managed float of the baht. The Philippines intervenes to defend its peso.
* July 18 - IMF approves an extension of credit to the Philippines of $1.1 billion.
* July 24 - Asian currencies fall dramatically. Malaysian Prime Minister Mahathir attacks "rogue speculators" and later points to financier George Soros.
* Aug. 13-14 - The Indonesian rupiah comes under severe pressure. Indonesia abolishes its system of managing its exchange rate through the use of a band.
* Aug. 20 - IMF announces $17.2 billion support package for Thailand with $3.9 billion from the IMF.
* Aug. 28 - Asian stock markets plunge. Manila is down 9.3%, Jakarta 4.5%.
* Sep. 4 - The peso, Malaysian ringgit, and rupiah continue to fall.
* Sep. 20 - Mahathir tells delegates to the IMF/World Bank annual conference in Hong Kong that currency trading is immoral and should be stopped.
* Sep. 21 - George Soros says, "Dr Mahathir is a menace to his own country."
* Oct. 8 - Rupiah hits a low; Indonesia says it will seek IMF assistance.
* Oct. 14 - Thailand announces a package to strengthen its financial sector.
* Oct. 20-23 - The Hong Kong dollar comes under speculative attack; Hong Kong aggressively defends its currency. The Hong Kong stock market drops, while Wall Street and other stock markets also take severe hits.
* Oct. 28+ - The value of the Korean won drops as investors sell Korean stocks.
* Nov. 5 - The IMF announces a stabilization package of about $40 billion for Indonesia. The United States pledges a standby credit of $3 billion.
* Nov. 3-24 - Japanese brokerage firm (Sanyo Securities), largest securities firm (Yamaichi Securities), and 10* largest bank (Hokkaido Takushoku) collapse.
* Nov. 21 - South Korea announces that it will seek IMF support.
* Nov 25 - At the APEC Summit, leaders of the 18 Asia Pacific economies endorse a framework to cope with financial crises.
* Dec 5 - Malaysia imposes tough reforms to reduce its balance of payments deficit.
* Dec 3 - Korea and IMF agree on $57 billion support package.
* Dec 18 - Koreans elect opposition leader Kim, Dae-jung as new President.
* Dec 25 - IMF and others provide $10 billion in loans to South Korea.
* Jan 6 - Indonesia unveils new budget that does not appear to meet IMF austerity conditions. Value of rupiah drops.
* Jan 8 - IMF and S. Korea agree to a 90-day rollover of short-term debt.
* Jan 12 - Peregrine Investments Holdings of Hong Kong collapses. Japan discloses that its banks carry about $580 billion in bad or questionable loans.
* Jan 15 - IMF and Indonesia sign an agreement strengthening economic reforms.
* Jan 29 - South Korea and 13 international banks agree to convert $24 billion in short-term debt, due in March 1998, into government-backed loans.
* Jan 31 - South Korea orders 10 of 14 ailing merchant banks to close.
* Feb 2- The sense of crisis in Asia ebbs. Stock markets continue recovery.
Source: Dick K. Nanto, The 1997-98 Asian Financial Crisis, CRS report
Table 1. Depreciation of Exchange Rates (Per US$)
Depreciation
Indonesia rupiah
-83%
Thai bath
-53%
South Korean won
-47%
Malaysian ringgit
-42%
Philippine peso
-40%
Japanese Yen
-21%
New Taiwan dollar
-20%
Singapore dollar
-19%
Source: Lim, Chong Yah, 2000, A Postmortem on the East Asian Exchange Rate Crisis
Table 2. Number of Quarters in recession, 1Q 1997-2Q 2000
Thailand
6
Japan
6
Hong Kong
5
Indonesia
5
Malaysia
5
South Korea
4
Philippines
3
Singapore
2
Source: Lim Chong Yah, 2000, A Postmortem on the East Asian Exchange Rate Crisis
Table 3. Collapse of Stock Markets
Amount Depreciated
Kuala Lumpur Composite
-79%
Bangkok SET
-76%
Philippines SE Composite
-67%
Jakarta SE Composite
-65%
Korea SE Composite
-65%
Straits Times Index
-72%
Hang Seng
-60%
Taiwan SE Weighted
-46%
Nikkei Average
-38%
Source: Lim Chong Yah, 2000, A Postmortem on the East Asian Exchange Rate Crisis
Table 4.
APEC Members
Date of Joining
Australia
Brunei Darussalam
Canada
Chile
People's Republic of China
Hong Kong, China
Indonesia
Japan
Republic of Korea
Malaysia
Mexico
New Zealand
Papua New Guinea
Peru
Philippines
Russia
Singapore
Chinese Taipei
Thailand
United States
Vietnam
6-7 Nov 1989
6-7 Nov 1989
6-7 Nov 1989
1-12 Nov 1992
2-14 Nov 1991
2-14 Nov 1991
6-7 Nov 1989
6-7 Nov 1989
6-7 Nov 1989
6-7 Nov 1989
7-19 Nov 1993
6-7 Nov 1989
7-19 Nov 1993
4-15 Nov 1998
6-7 Nov 1989
4-15 Nov 1998
6-7 Nov 1989
2-14 Nov 1991
6-7 Nov 1989
6-7 Nov 1989
4-15 Nov 1998
Source: www.apecsec.org.sg
Table 5. List of East Asian members in WTO
Hong Kong 23 April 1986
Indonesia 24 February 1950
Japan 10 September 1955
Korea, Republic of 14 April 1967
Malaysia 24 October 1957
Singapore 20 August 1973
Thailand 20 November 1982
Source: http://www.wto.org/
Table 6. Proposed and actual regional trading arrangements involving East Asian countries
Bilateral Asia Pacific Type of agreement Status Year
Singapore-Australia Free Trade Area Under Negotiation 2000
2 Singapore-Canada Free Trade Area Under Negotiation 2001
3 Singapore-Chile Free Trade Area Under Negotiation 2000
4 Singapore-Japan New Age Economic Partnership Signed 2002
5 Singapore-Mexico Free Trade Area Under Negotiation 1999
6 Singapore-New Zealand Closer Economic Partnership Implemented 2001
7 Singapore- Korea, Rep. of Free Trade Area Proposal
8 Singapore-Chile Free Trade Area Under Negotiation 2000
9 Singapore-Taiwan (China) Free Trade Area Proposal/Study 2002
0 Singapore-USA Free Trade Area Under Negotiation 2000
1 Korea, Rep. of-Australia Free Trade Area Official Discussion 2000
2 Korea, Rep. of-China Free Trade Area Proposal/Study
3 Korea, Rep. of-Chile Free Trade Area Under Negotiation 1998
4 Korea, Rep. of-Japan Free Trade Area Official Discussions/study 1998
5 Korea, Rep. of-Mexico Free Trade Area Official Discussions/study 2000
6 Korea, Rep. of-New Zealand Free Trade Area Official Discussions/study 2000
7 Korea, Rep. of-Thailand Free Trade Area Proposal/Study 2001
8 Korea, Rep. of-USA Free Trade Area Under Negotiation 2001
9 Japan-Canada Free Trade Area Proposal/Study 2002
20 Japan-Chile Free Trade Area Official Discussions/study 2000
21 Japan-Mexico Free Trade Area Official Discussions/study 1998
22 Japan-Thailand Closer Economic Partnership Proposal/Study 2002
23 Hong Kong (China)-New Zealand Closer Economic Partnership Official discussion 2001
24 Thailand-Croatia Free Trade Area Proposal 2001
25 Thailand-Czech Rep. Free Trade Area Proposal 2001
26 USA-Philippines Free Trade Area Proposal 2002
27 USA-Taiwan (China)
Regional plus
28 AFTA Free Trade Area Implemented 1992
29 AFTA+CER Closer Economic Relations Official discussions/Study 1999
30 ASEAN+China Free Trade Area Official/Study/Negotiation 2001
31 ASEAN+Japan Comprehensive Econ. P'nership Official Discussions 2002
32 ASEAN+ Korea, Rep. of Free Trade Area Official discussions 2002
33 Singapore+EFTA Free Trade Area Signed, Implem. '03 2002
34 ASEAN+3 Free Trade Area Official discussions/Study 2000
New regional
35 Japan-h Korea, Rep. of-China Free Trade Area Official discussions/study 2000
36 Pacific 5 Free Trade Area Proposal 1998
Notes:
EFTA: Switzerland, Iceland, Liechtenstein, and Norway.
Pacific 5: Singapore, Australia, New Zealand, United States, and Chile.
ASEAN: Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam.
ASEAN+3: ASEAN plus Japan, Korea, and China.
AFTA: ASEAN Free Trade Area.
CER: Australia-New Zealand Closer Economic Partnership.
Sources: Austria (2002), and recent reports in media
Table 7. The Impact of East Asian Regionalism on Regional GDP
(unit: %)
Regionalism in Northeast Asia
China-Japan FTA
China-Korea FTA
Japan-Korea FTA
NEAFTA
TL
TL&CA
TL
TL&CA
TL
TL&CA
TL
TL&CA
China
0.27
.11
0.12
0.45
-0.01
-0.03
0.34
.29
Japan
0.05
0.12
-0.00
-0.04
0.01
0.04
0.06
0.13
Korea
-0.05
-0.26
0.76
.76
0.22
0.92
0.94
2.45
ASEAN
-0.03
-0.36
-0.02
-0.19
-0.01
-0.08
-0.06
-0.59
ROW
-0.00
-0.06
-0.00
-0.06
-0.00
-0.02
-0.01
-0.12
Regionalism in East Asia
China-ASEAN FTA
China-ASEAN FTA
Japan-ASEAN FTA
EAFTA
TL
TL&CA
TL
TL&CA
TL
TL&CA
TL
TL&CA
China
0.076
0.441
-0.02
-0.12
-0.01
-0.07
0.36
.39
Japan
-0.007
-0.076
0.04
0.09
-0.01
-0.05
0.10
0.17
Korea
-0.025
-0.177
-0.04
-0.20
0.13
0.65
.01
2.84
ASEAN
0.229
2.077
0.43
3.19
0.41
2.17
0.73
4.00
ROW
-0.004
-0.075
-0.01
-0.05
-0.00
-0.04
-0.02
-0.22
Table 8. The Impact of East Asian Regionalism on Regional Exports
(unit: %)
Regionalism in Northeast Asia
China-Japan FTA
China-Korea FTA
Japan-Korea FTA
NEAFTA
TL
TL&CA
TL
TL&CA
TL
TL&CA
TL
TL&CA
China
4.64
5.82
2.74
3.26
-0.06
-0.09
6.11
7.51
Japan
1.64
2.03
0.03
-0.03
0.38
0.52
2.03
2.53
Korea
-0.17
-0.41
0.69
2.06
2.07
3.01
2.60
4.69
ASEAN
-0.14
-0.54
-0.03
-0.23
-0.03
-0.13
-0.19
-0.83
ROW
0.01
-0.10
0.02
-0.06
0.01
-0.03
0.03
-0.17
Regionalism in East Asia
China-ASEAN FTA
China-ASEAN FTA
Japan-ASEAN FTA
EAFTA
TL
TL&CA
TL
TL&CA
TL
TL&CA
TL
TL&CA
China
2.45
3.04
-0.15
-0.24
-0.09
-0.13
7.17
8.79
Japan
0.04
-0.05
.01
.39
0.01
-0.07
3.03
3.82
Korea
-0.09
-0.21
-0.15
-0.31
0.91
.66
3.32
5.93
ASEAN
.99
4.28
2.98
6.36
.72
3.87
3.87
7.88
ROW
-0.01
-0.10
-0.02
-0.11
-0.02
-0.06
-0.00
-0.34
Table 9. The Impact of East Asian Regionalism on Regional Imports
(unit: %)
Regionalism in Northeast Asia
China-Japan FTA
China-Korea FTA
Japan-Korea FTA
NEAFTA
TL
TL&CA
TL
TL&CA
TL
TL&CA
TL
TL&CA
China
5.79
6.25
3.34
3.54
-0.15
-0.15
7.27
7.84
Japan
3.28
3.20
-0.19
-0.19
0.92
0.89
4.08
3.98
Korea
-0.66
-0.78
3.01
3.63
2.77
3.21
5.18
6.13
ASEAN
-0.42
-0.71
-0.15
-0.31
-0.10
-0.16
-0.63
-1.09
ROW
-0.14
-0.18
-0.07
-0.11
-0.04
-0.05
-0.23
-0.30
Regionalism in East Asia
China-ASEAN FTA
China-ASEAN FTA
Japan-ASEAN FTA
EAFTA
TL
TL&CA
TL
TL&CA
TL
TL&CA
TL
TL&CA
China
3.40
3.61
-0.44
-0.45
-0.26
-0.26
8.47
9.15
Japan
-0.50
-0.40
2.23
2.32
-0.46
-0.35
5.85
5.90
Korea
-0.42
-0.48
-0.58
-0.61
2.18
2.55
6.63
7.87
ASEAN
3.31
4.89
4.22
6.61
2.72
4.23
5.24
8.06
ROW
-0.13
-0.16
-0.18
-0.16
-0.09
-0.09
-0.49
-0.56
Table 10. The Impact of EAFTA on East Asian Intra-Regional Trade
(unit: %, mil. $)
Exporter
China
Japan
Korea
ASEAN
Importer
Japan
Korea
ASEAN
China
Korea
ASEAN
China
Japan
ASEAN
China
Japan
ASEAN
Agriculture
Forestry
Fisheries
Energy
Food
Textiles
Clothing
Chemistry
Metals
Auto, Part
Otrns1)
Electr1)
Mach1)
Omanf1)
34.48
(2,199)
7.69
(5)
8.13
(30)
-7.25
(-137)
05.74
(2,419)
25.17
(1,052)
60.89
(5,813)
0.60
(223)
6.69
(137)
8.66
(12)
.57
(5)
7.87
(403)
5.43
(306)
8.70
(407)
284.37
(1,991)
2.01
(1)
54.32
(24)
8.23
(174)
21.24
(586)
37.85
(530)
52.22
(530)
25.89
(189)
22.93
(397)
78.73
(162)
58.16
(26)
34.57
(348)
34.22
(275)
27.54
(213)
67.51
(664)
28.50
(1)
40.66
(6)
5.36
(50)
59.26
(545)
40.46
(732)
84.62
(831)
29.81
(603)
4.94
(304)
-46.26
(-46)
25.81
(115)
20.11
(894)
23.14
(735)
37.47
(598)
35.03
(35)
42.02
(2)
71.70
(18)
2.60
(2)
32.95
(244)
68.97
(2,351)
43.53
(831)
27.92
(1,727)
33.57
(1,900)
24.78
(4,097)
74.87
(460)
28.97
(3,763)
36.09
(5,905)
34.94
(998)
86.39
(27)
9.48
(0)
58.29
(14)
2.51
(3)
30.74
(251)
29.79
(162)
41.33
(36)
23.34
(961)
28.04
(927)
64.77
(403)
21.37
(23)
21.26
(1,119)
27.54
(2,886)
26.04
(379)
89.28
(36)
27.23
(1)
48.19
(4)
0.63
(4)
79.17
(300)
34.05
(345)
87.78
(69)
20.77
(1,379)
24.62
(1,804)
91.78
(6,219)
65.92
(1,423)
4.06
(834)
2.30
(2,809)
24.89
(662)
37.46
(22)
7.61
(1)
69.72
(5)
9.09
(1)
93.79
(200)
58.97
(2,794)
74.45
(879)
25.29
(1,525)
4.45
(513)
54.00
(210)
43.94
(62)
9.69
(833)
37.31
(871)
38.68
(595)
59.73
(539)
5.26
(0)
9.10
(28)
-6.19
(-2)
32.27
(1,308)
20.61
(156)
58.89
(506)
9.19
(244)
7.72
(177)
-12.08
(-14)
-12.69
(-4)
-0.42
(-14)
-4.63
(-76)
-1.18
(-9)
69.01
(18)
-3.11
(0)
-4.00
(-1)
6.42
(0)
10.04
(138)
49.43
(743)
37.84
(180)
21.88
(541)
9.20
(511)
343.99
(2,081)
26.45
(134)
5.83
(410)
6.34
(401)
39.81
(206)
51.05
(574)
0.15
(21)
-3.62
(-7)
-4.34
(-48)
84.41
(1,502)
33.07
(442)
38.23
(81)
21.54
(1,316)
3.81
(146)
6.14
(8)
92.00
(117)
7.18
(637)
3.67
(514)
31.26
(780)
48.27
(1,578)
-5.15
(-23)
-2.66
(-6)
-7.07
(-479)
13.56
(4,261)
6.44
(163)
67.16
(1,060)
7.43
(236)
8.02
(125)
44.33
(100)
0.14
(9)
6.70
(858)
7.94
(319)
9.37
(1,049)
26.25
(139)
4.74
(3)
79.06
(5)
0.11
(260)
62.02
(382)
34.12
(90)
61.38
(78)
8.28
(226)
6.53
(86)
17.54
(21)
48.53
(7)
33.18
(948)
36.23
(216)
28.14
(312)
Note: 1) Otrn - Other Transportation, Electr - Electrical Products and Electronics, Mach - Machinery, Omanf - Other Manufacturing 2) No.s in parentheses are the values of export growth in million dollars.
Table 11. The Impact of East Asian Regionalism on Industrial Production
(unit: %)
China
Japan
Korea
ASEAN
NEAFTA
EAFTA
NEAFTA
EAFTA
NEAFTA
EAFTA
NEAFTA
EAFTA
Agriculture
Forestry
Fisheries
Energy
Food
Textiles
Clothing
Chemistry
Metals
Auto, Part
Otrn
Electr
Mach
Omanf
2.34
0.02
0.74
-0.32
3.75
-0.12
6.94
-0.63
-1.47
-11.10
-0.03
2.69
-1.11
0.16
2.37
-0.02
0.76
-0.15
2.86
0.21
6.83
-0.68
-1.17
-11.11
0.24
3.24
-0.81
0.18
-1.76
-0.49
-0.36
-0.66
-0.53
3.99
-4.70
0.60
0.89
-0.56
-2.33
0.46
.54
0.11
-2.84
-0.70
-0.66
-0.67
-1.33
3.98
-5.78
0.86
.60
.23
-0.30
-0.10
.82
-0.04
-1.62
0.47
.54
-0.69
7.20
5.64
9.30
3.88
-0.80
-2.36
-6.03
0.85
-1.69
.49
-1.87
0.26
.42
-1.15
6.50
7.46
8.64
4.52
0.10
2.17
-7.78
0.13
-1.71
.46
-0.12
-0.25
-0.16
0.09
-0.71
-3.10
-2.20
-0.77
-0.25
-0.14
0.09
-1.29
-0.92
-0.28
2.09
3.00
.62
0.10
8.75
4.59
7.36
4.23
2.74
-22.27
7.09
6.46
7.67
4.19
Note: Otrn - Other Transportation, Electr - Electrical Products and Electronics, Mach - Machinery, Omanf - Other Manufacturing
References
i. Akio Hosono (2002) 'Towards Closer Cooperation between East Asia and Latin America: FEALAC and other initiatives'
ii. Dick K. Nanto (1998) 'The 1997-98 Asian Financial Crisis', CRS Report
iii. Donald Barry and Ronald C. Keith 'Introduction: Changing Perspectives on Regionalism and Multilateralism'
iv. Edward A. Fogarty (2001) 'The New Asia-Pacific Bilateralism: Whither APEC?'
v. Japan External Trade Organization (JETRO) (2003) 'Prospects for Free Trade Agreements in East Asia'
vi. Kim Kihwan 'New Trends towards Preferential Trade Arrangements in East Asia: An Unmixed Blessing?'
vii. Lee Seo-hang 'Multilateralism in East Asia: The role of ARF and its future'
viii. Lim Chong Yah (2001) 'Southeast Asia: The Long Way Ahead', World Scientific
ix. Mari Pangestu and Sudarshan Gooptu 'New Regionalism: Options for China and East Asia'
x. Narihiro Bono 'Regionalism in East Asia: The Transformation of Regional Political Economy in East Asia'
xi. P.J. Lloyd (2002) 'New Regionalism and New Bilateralism in the Asia Pacific'
xii. Soogil Young (2003) 'Strategy for Coping with a Proliferation of RTAs and Encouraging Convergence towards Regional and Global Liberalisation and Integration Objectives: an East Asian Perspective, PECC Trade Forum Seminar
Refer to appendix 1
2 Refer to table 1
3 Refer to table 2 & 3
4 Refer to table 4
5 Refer to table 5
6 Refer to table 6
