Contesting Asian Economic Integration


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These presentation slides accompanied a similarly titled LSE IDEAS presentation:

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Contesting Asian Economic Integration

  1. 1. Contesting Asian Economic Integration: China, Japan, US An SEAP & EAP Joint Event
  2. 2. East Asia, the Frontier for Economic Integration <ul><li>Multilaterally, WTO Doha Round negotiations are stalled at 106 months since November 2001 </li></ul><ul><ul><li>Tokyo Round (74 months); Uruguay Round (87) </li></ul></ul><ul><ul><li>LDCs want agricultural market access to West / enabling of Mode IV temporary migration </li></ul></ul><ul><ul><li>Developed countries seek non-agricultural market access to LDCs </li></ul></ul><ul><li>Meanwhile, East Asia is arguably the most dynamic region in the world in economic terms </li></ul><ul><li>East Asia is becoming the epicenter for regional trade agreements, especially after ACFTA was inked in 2002 </li></ul>
  3. 3. Stepping Stones or Trade Diversion?
  4. 4. China, Japan & US Contesting Regional Integration <ul><li>FTAs are by nature political </li></ul><ul><ul><li>Include some countries, exclude others (“East Asia” and the “Asia-Pacific” as political, strategic constructs) </li></ul></ul><ul><ul><li>Include some goods / services, exclude others </li></ul></ul><ul><ul><li>Favour different local / international interests via tariffs, implementation schedules, and so forth: agriculture, manufacturing, labour, IP, etc. </li></ul></ul><ul><ul><li>Other considerations impinge like security </li></ul></ul><ul><li>Such considerations combine to shape how the protagonists—the world’s three largest economies—approach regional integration </li></ul>
  5. 5. ASEAN in the Middle <ul><li>This “middle power” grouping has arguably become a key player in the wider region </li></ul><ul><ul><li>ASEAN is generally non-threatening </li></ul></ul><ul><ul><li>Often discordant ASEAN has no “grand strategy” of its own </li></ul></ul><ul><li>But is the sum larger than the parts? </li></ul><ul><ul><li>ASEAN-hosted gatherings are among the focal points for discussing regional integration </li></ul></ul><ul><ul><li>Can ASEAN play off China, Japan & US to see who offers the best overall deal? </li></ul></ul><ul><li>ASEAN has its own regional integration project underway aspiring for a single market by 2015 </li></ul>
  6. 6. (1) China Looming Large <ul><li>It recently surpassed Japan as the world’s second largest economy in nominal terms </li></ul><ul><li>Overtook Germany in 2009 as world’s largest goods exporter </li></ul><ul><li>In 2008, it overtook US as Southeast Asia’s third largest trading partner; last year, it became ASEAN’s outright largest trading partner </li></ul><ul><li>China arguably started FTA proliferation via 2002 ACFTA which began this year </li></ul><ul><li>Yuan swap experimentation for trade settlement with ASEAN member states and others may presage greater role for its currency </li></ul>
  7. 7. ASEAN+3 <ul><li>Is arguably the most coherent and advanced FTA proposal here w/ China, Japan, S Korea </li></ul><ul><ul><li>Taiwan, Mongolia, North Korea? </li></ul></ul><ul><li>Membership similar to Mahathir’s 1990 EAEC proposal famously dubbed ‘the caucus without Caucasians’ (to US disapproval about exclusion) </li></ul><ul><li>Several ASEAN+3 initiatives are already underway: CMIM (reserve pooling), ABMI (bond market dev’t), EAERR (rice reserve) </li></ul><ul><li>What about PRC’s experiments with using yuan swaps to settle transactions with Southeast Asian countries and beyond? </li></ul>
  8. 8. (2) Japan Should Not be Forgotten <ul><li>It is the driving force behind the Asian Development Bank which is keen on regional integration </li></ul><ul><li>Mid-80s efforts to shield firms from an overly strong yen drove its expansion in the region; a lot of today’s “Factory Asia” </li></ul><ul><li>It has been the largest aid donor to ASEAN states in recent years </li></ul><ul><li>Has bilateral FTAs with 7 out of 10 ASEAN states it may eventually fold into an “ASEAN-Japan Comprehensive Economic Partnership Agreement” </li></ul><ul><li>Still, there is the overhang of WWII history: the “Greater East Co-Prosperity Sphere” has never been fully removed from regional memory </li></ul>
  9. 9. The East Asian Community (ASEAN+6…or now +8?) <ul><li>Some East Asia Summit attendees envision an EAC trade deal </li></ul><ul><li>Old explanation: Japan pressed hard for the inclusion of India, Australia and New Zealand to counterbalance PRC w/ liberal democracies </li></ul><ul><ul><li>ASEAN has trade deals with India, ANZ </li></ul></ul><ul><ul><li>Isn’t India in South Asia, ANZ in Oceania? </li></ul></ul><ul><li>New explanation after including US, Russia: ??? US certainly is not in East Asia; Russia a stretch </li></ul><ul><ul><li>No symmetry in having existing FTAs w/ ASEAN core </li></ul></ul><ul><ul><li>Would US embrace an FTA with Myanmar which it has applied several sanctions against? Russia is not even a World Trade Organization member </li></ul></ul>
  10. 10. (3) Is America Re-Engaging With the Region? <ul><li>US followed China in signing ASEAN Treaty of Amity and Cooperation in 2009: </li></ul><ul><ul><li>Is it another ARF -> TAC -> FTA progression? </li></ul></ul><ul><li>Obama styled himself America’s “First Pacific President” then failed to visit Indonesia on three separate occasions (health care bill, BP spill) </li></ul><ul><ul><li>Now supposed to visit after Yokohama APEC </li></ul></ul><ul><li>No US-ASEAN FTA on the horizon </li></ul><ul><ul><li>Now in fourth place in trade league tables w/ASEAN </li></ul></ul><ul><li>Just appointed an ambassador to ASEAN </li></ul>
  11. 11. The Trans-Pacific Partnership <ul><li>Latest US attempt to involve itself in an FTA within APEC (formed in 1989) – nominally a consultative, intergovernmental body </li></ul><ul><ul><li>In a line of failed APEC trade liberalization initiatives like EVSL and Free Trade Area of the Asia-Pacific </li></ul></ul><ul><ul><li>Present members include Brunei, Chile, New Zealand & Singapore; US along with Australia, Peru, Vietnam seek expansion </li></ul></ul><ul><li>USTR calls it a ‘high standard’ agreement with several US priorities: labour, environment, competition law, government procurement, IP </li></ul><ul><li>‘ Asia-Pacific’ is broad to the point of confusion; logic of TPP even more obscure than EAC </li></ul><ul><li>USTR cites Scollay IIE paper estimating $25B export reduction from discrimination </li></ul>
  12. 12. Is This [Region, World] Big Enough for the Three of Them? <ul><li>Chinese, Japanese, & US interests are reflected in their visions for regional integration </li></ul><ul><ul><li>What to negotiate, whom to incorporate </li></ul></ul><ul><li>All are busy attempting to shape the future of regional economic integration </li></ul><ul><li>Which FTA is most likely to come to fruition in the Asia-Pacific: ASEAN+3, East Asian Community (ASEAN+6 or +8), or Trans-Pacific Partnership? </li></ul><ul><li>Whither Taiwan? </li></ul>