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Asian FTAs: Trends, prospects and challenges

Author

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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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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Masahiro Kawai & Shujiro Urata, 2010. "Changing Commercial Policy in Japan During 1985–2010," Trade Working Papers 23056, East Asian Bureau of Economic Research.
    2. Dee, Philippa & McNaughton, Anne, 2011. "Promoting Domestic Reforms through Regionalism," ADBI Working Papers 312, Asian Development Bank Institute.
    3. Toyoshima, Yuki & Hamori, Shigeyuki, 2013. "Asymmetric dynamics in stock market correlations: Evidence from Japan and Singapore," Journal of Asian Economics, Elsevier, pages 117-123.
    4. Wendy Dobson, 2011. "History Matters: China and Global Governance," Working Papers Series 20, Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Jan 2011.
    5. 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.
    6. Yose Rizal Damuri, . "East Asian Regionalism and the Multilateral Trading System ERIA," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    7. 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.
    8. 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, September.
    9. Barry Eichengreen, 2010. "Lessons of the crisis for emerging markets," International Economics and Economic Policy, Springer, pages 49-62.
    10. Danielle Tan, 2014. "The Greater Mekong Subregion programme: reflections for a renewed paradigm of regionalism," Asia Europe Journal, Springer, vol. 12(4), pages 383-399, December.
    11. Capannelli, Giovanni & Tan, See Seng, 2012. "Institutions for Asian Integration: Innovation and Reform," ADBI Working Papers 375, Asian Development Bank Institute.
    12. Masahiro Kawai & Peter A. Petri, 2014. "Asia'S Role In The Global Economic Architecture," Contemporary Economic Policy, Western Economic Association International, vol. 32(1), pages 230-245, January.
    13. 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.
    14. repec:krk:eberjl:v:5:y:2017:i:4:p:135-152 is not listed on IDEAS
    15. Masahiro Kawai & Peter A. Petri, 2010. "Asia’s Role in the Global Economic Architecture," Governance Working Papers 22728, East Asian Bureau of Economic Research.
    16. Masahiro Kawai & Ganeshan Wignaraja, 2014. "Evolving trade policy architecture and FTAs in Asia," Chapters,in: New Global Economic Architecture, chapter 7, pages 148-171 Edward Elgar Publishing.
    17. Yiping Huang & Bijun Wang, 2011. "From the Asian Miracle to an Asian Century? Economic Transformation in the 2000s and Prospects for the 2010s," RBA Annual Conference Volume,in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.

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