Should East Asia go regional? No, no and maybe

The author studies the case for three different approaches to regionalism in East Asia. First, he examines closely the only serious attempt at preferential trading in the region - the Association of Southeast Asian Nations (ASEAN), which has recently announced plans to form the ASEAN Free Trade Area (AFTA). Conclusion: the costs of such subregional schemes far outweigh their expected benefits. Second, he evaluates the case for a formal East Asian trading bloc along the lines of the European Community, and concludes that although the threat of such a bloc may serve some purpose, its actual execution might be difficult, given the diverse levels of protection across different countries in the region, and the possibility of retaliation from the United States through increased protection against East Asian goods. Third, he examines the case for simultaneous, most favored nation-style, nondiscriminatory regionwide liberalization. The author argues that although such a regional approach may be feasible, the case for it is far from airtight. On the one hand, this approach will face less resistance from the United States, and is likely to promote an open world trading systemin the long run. On the other hand, in the short run it is likely to be resisted because of the adverse effect on terms of trade in the participating countries.