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Asian FTAs: Trends, prospects and challenges

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  • Kawai, Masahiro
  • Wignaraja, Ganeshan

Abstract

Although a latecomer, economically important Asia has emerged at the forefront of global free trade agreement (FTA) activity. This has sparked concerns about the negative effects of Asian FTAs, including the "noodle bowl" problem. Amid slow progress in the World Trade Organization's (WTO) Doha negotiations and the global financial crisis, however, Asian regionalism seems to be here to stay. The focus for policymakers should then be how best to minimize the costs of FTAs while maximizing their benefits. Adopting a pragmatic perspective, this paper examines key trends and challenges in Asian FTAs. It provides new evidence from firm surveys, analysis of specific agreements, and computable general equilibrium estimates. It provides the following set of recommendations: strengthen the support system for using FTAs; rationalize rules of origin and upgrade their administration; ensure better coverage of agricultural trade; forge comprehensive "WTO-plus" agreements; and encourage a region-wide FTA. Political economy considerations suggest that a likely scenario is for FTA consolidation in Asia--by creating a People's Republic of China-Japan-Korea FTA, combining it with ASEANÂ +Â 1 FTAs, and then involving Australia, India, and New Zealand--to be followed by connections with North America and Europe. In conclusion, the analysis suggests a bottom-up approach to a Doha Round Agreement should be adopted.

Suggested Citation

  • Kawai, Masahiro & Wignaraja, Ganeshan, 2011. "Asian FTAs: Trends, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 22(1), pages 1-22, February.
    • Handle: RePEc:eee:asieco:v:22:y:2011:i:1:p:1-22
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    7. Stephenson, Sherry & Roberts, Maryse, 2011. "Evaluating the Contributions of Regional Trade Agreements to Governance of Services Trade," ADBI Working Papers 307, Asian Development Bank Institute.
    8. Masahiro Kawai & Peter A. Petri, 2010. "Asia’s Role in the Global Economic Architecture," Governance Working Papers 22728, East Asian Bureau of Economic Research.
    9. Sinha, Avik & Shah, Muhammad Ibrahim & Mehta, Atul & Sharma, Rajesh, 2022. "Impact of Energy Innovation on Greenhouse Gas Emissions: Moderation of Regional Integration and Social Inequality in Asian Economies," ADBI Working Papers 1304, Asian Development Bank Institute.
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    11. Minsoo Park & Hongjai Rhee, 2014. "Effects of FTA Provisions on the Market Structure of the Korean Automobile Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(1), pages 39-58, August.
    12. Jürgen Rüland, 2012. "The rise of “diminished multilateralism”: East Asian and European forum shopping in global governance," Asia Europe Journal, Springer, vol. 9(2), pages 255-270, March.
    13. Mia Mikic & Mochamad Pasha (ed.), 2011. "Fighting Irrelevance: The Role of Regional Trade Agreements in International Production Networks in Asia," STUDIES IN TRADE AND INVESTMENT, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), number tipub2597, April.
    14. Capannelli, Giovanni & Tan, See Seng, 2012. "Institutions for Asian Integration: Innovation and Reform," ADBI Working Papers 375, Asian Development Bank Institute.
    15. Selvarajan, Sonia Kumari & Ab-Rahim, Rossazana, 2020. "Financial Integration and Economic Growth: Should Asia Emulate Europe?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 35(1), pages 191-213.
    16. Sang Chul Park, 2017. "RCEP versus TPP with the Trump Administration in the USA and Implications for East Asian Economic Cooperation," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(4), pages 135-152.
    17. Sithanonxay Suvannaphakdy & Hsiao Chink Tang & Alisa DiCaprio, 2016. "Assessing the trade impacts of the ASEAN + 6 FTA for Lao PDR," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 30(2), pages 72-89, November.
    18. Masahiro Kawai & Ganeshan Wignaraja, 2014. "Evolving trade policy architecture and FTAs in Asia," Chapters, in: Masahiro Kawai & Peter J. Morgan & Pradumna B. Rana (ed.), New Global Economic Architecture, chapter 7, pages 148-171, Edward Elgar Publishing.
    19. Ha Thi-Thu Le & Trang Thi-Dai Luong & Trang Thi Thu Nguyen & Duy Van Nguyen, 2023. "Determinants of Intellectual Property Rights Protection in Asian Developing Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4780-4806, December.
    20. Yose Rizal Damuri, . "East Asian Regionalism and the Multilateral Trading System ERIA," Chapters, in: Yoshifumi Fukunaga & John Riady, Pierre Sauve (ed.), The Road To Bali: ERIA Perspectives on the WTO Ministerial and Asian Integration, chapter 10, pages 111-123, Economic Research Institute for ASEAN and East Asia (ERIA).
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