Regional Trade Agreements in East Asia: Past and Future

Abstract

MotivationProliferating regional trade agreements (RTAs) in East Asia since the region's financial crisis in 1997 have been hotly debated. To date, however, no research has comprehensively examined the desirability of East Asian RTAs based on such factors as membership and evolutionary paths. PurposeWe assess, retrospectively and prospectively, East Asian countries' efforts to liberalize the regional market through co-operation. We investigate (i) why RTAs have proliferated in East Asia; (ii) the main characteristics of East Asian RTAs; (iii) whether East Asian countries are desirable trading partners for one another; and (iv) the prospects of East Asian RTAs. Approach and methodsWe conduct a qualitative analysis on the desirability of East Asian partnership and examine quantitative studies of the likely impacts of East Asian RTAs on members, non-members, and the global economy. FindingsWe verify that East Asian neighbours are appropriate trading partners for the formation of RTAs. Policy implicationsWe recommend that East Asian RTAs should follow an expansionary path such as the five ASEAN+1 RTAs to the Regional Comprehensive Economic Partnership (RCEP) to the Free Trade Area of the Asia-Pacific (FTAAP). Moreover, the region must co-operate with major external trading partners by forming cross-regional RTAs with the European Union (EU) and United States (US). Two priority changes must also be implemented: the harmonization or simplification of the rules of origin and cumulation of value contents among East Asian RTA members.