The need for deeper financial and trade cooperation in East Asia became clear through the experience of the East Asian financial crisis. The imperatives of East Asian cooperation mean that the quest for East Asian influence and leadership on regional and international affairs through ASEAN + 3 will continue. However, the creation of an East Asian Economic Community requires leadership and a model that is consistent with East Asian (not European or American) circumstances. Japan’s changing role in the regional economy prompted policy initiatives such as espousal of bilateral free trade agreements (FTAs) aimed at closer East Asian regional economic and political links. This fundamental shift in Japan’s trade policy diplomacy was effected without public debate in Japan and the reactions to it from partner countries, almost entirely unanticipated by Japanese policymakers, led to some confusion in policy strategy. Discriminatory regional trade arrangements do not reflect the needs and circumstances of the East Asian economy at the beginning of the twenty-first century, and specifically the need to accommodate the growth and opening of the Chinese economy within the regional and global economic systems. The proliferation of FTA arrangements, with increasingly complicated rules of origin, is more likely to distort and derail rather than to encourage broader and deeper economic integration. The objectives of ‘closer economic partnership’ arrangements are better served by nondiscriminatory trade agreements than by distorting and limited bilateral FTAs. Many of the features of the East Asian economy have not fundamentally changed. It continues to be distinguished by its extra-regional trade and economic reach. Large flows of FDI, particularly into China, cement economic interaction with the global economy. Both economic and political considerations have influenced thinking among the Chinese leadership about the change in trade policy strategy. The sensible and rational choice for China is a global choice, the acceptance and entrenchment of global obligations and responsibilities in a multilateral ‘pluralist’ setting.
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Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number
382.
Length: 30 pages Date of creation: Jan 2005 Date of revision: Handle: RePEc:eab:tradew:382
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Find related papers by JEL classification: R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography) P45 - Economic Systems - - Other Economic Systems - - - International Linkages O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations F14 - International Economics - - Trade - - - Country and Industry Studies of Trade F15 - International Economics - - Trade - - - Economic Integration
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