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Regionalism and Free Trade Agreements in East Asia


  • Inkyo Cheong

    (Research Fellow, Korea Institute for International Economic Policy (KIEP) 300-4, Yomgok-Dong, Seocho-Gu Seoul 137-747 South Korea)


This paper gives an overview of the progress of regionalism in East Asia and examines the background of the recent embrace of trade agreements by China, Japan, and South Korea. It discusses the progress toward free trade agreements (FTAs) within East Asia and offers reasons for their slow development. The impacts of eight hypothetical East Asian FTAs are estimated using a computable generalized equilibrium model. The model predicts that countries will benefit from both bilateral FTAs and regional FTAs (such as a Northeast Asian FTA and an East Asian FTA); however, greater economic benefits would be gained under regional FTAs than under bilateral FTAs. Although the simulation used in the study estimates that a Northeast Asian FTA and an East Asian FTA would bring a similar level of economic benefits, results indicate that greater benefits would accrue under an East Asian FTA.Discussions of a Japan-ASEAN FTA are under way, after talks of an FTA between ASEAN and China blossomed in late 2000. China and Japan are competitively promoting bilateral FTAs with ASEAN. As discussions of an FTA with ASEAN heat up in China and Japan, South Korea has also begun reviewing the economic feasibility of an FTA with ASEAN. If China, Japan, and South Korea competitively pursue bilateral FTAs with ASEAN, this may result in several important problems, including spaghetti bowl effects, a hub-and-spoke dilemma, or struggles for regional leadership.This paper tries to show that an East Asian FTA covering the whole region is economically desirable and stresses that East Asian countries should introduce a regionwide FTA, rather than multiple bilateral or subregional FTAs. An East Asian FTA can be realized only in the long term because of economic, political, and social obstacles. East Asia, which already lags behind other regions in terms of regionalism, should not passively wait for the establishment of an East Asian FTA, which is likely to take some time to be established. Copyright (c) 2003 Center for International Development and the Massachusetts Institute of Technology.

Suggested Citation

  • Inkyo Cheong, 2003. "Regionalism and Free Trade Agreements in East Asia," Asian Economic Papers, MIT Press, vol. 2(2), pages 145-180.
  • Handle: RePEc:tpr:asiaec:v:2:y:2003:i:2:p:145-180

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    References listed on IDEAS

    1. McKibbin, Warwick J & Vines, David, 2000. "Modelling Reality: The Need for Both Inter-temporal Optimization and Stickiness in Models for Policy-Making," Oxford Review of Economic Policy, Oxford University Press, vol. 16(4), pages 106-137, Winter.
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    4. Ianchovichina, Elena, 2001. "Trade Liberalization in China’s Accession to WTO," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 421-445.
    5. Wing Thye Woo, "undated". "Chinese Economic Growth: Sources And Prospects," Department of Economics 96-08, California Davis - Department of Economics.
    6. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    7. Warwick J. McKibbin & K. K. Tang, 2000. "Trade and Financial Reform in China: Impacts on the World Economy," The World Economy, Wiley Blackwell, vol. 23(8), pages 979-1003, August.
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    Cited by:

    1. Mun Heng Toh, 2006. "Singapore's Perspectives on the Proliferation of RTAs in East Asia and Beyond," Global Economic Review, Taylor & Francis Journals, vol. 35(3), pages 259-284.
    2. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers 2/13, Sapienza University of Rome, DISS.
    3. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers 2/13, Sapienza University of Rome, DISS.

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