Asian Cross-Regionalism An Analytical Framework PDF

Introduction: Understanding East Asian Cross-Regionalism: An Analytical Framework
Author(s): Mireya Solís and Saori N. Katada

Source: Pacific Affairs, Vol. 80, No. 2, East Asian Cross-Regionalism (Summer, 2007), pp.
229-257
Published by: Pacific Affairs, University of British Columbia
Stable URL: http://www.jstor.org/stable/40023010
Accessed: 13-09-2016 12:36 UTC
REFERENCES
Linked references are available on JSTOR for this article:
http://www.jstor.org/stable/40023010?seq=1&cid=pdf-reference#references_tab_contents
You may need to log in to JSTOR to access the linked references.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted
digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about
JSTOR, please contact support@jstor.org.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms
Pacific Affairs, University of British Columbia is collaborating with JSTOR to digitize, preserve and
extend access to Pacific Affairs
This content downloaded from 147.91.1.45 on Tue, 13 Sep 2016 12:36:33 UTC
All use subject to http://about.jstor.org/terms
INTRODUCTION
Understanding East A
Cross-Regionalism:
An Analytical Framewor
Mireya Solis And Saori N. Katada
Introduction
political TheBy thenewlatewave
economy today. of Eastregionalism
1990s, even Asia, a region has become an important feature of global
previously characterized by a near absence of formal free trade agreements
(FTAs) and regional institutions, was engaged in a remarkable number of
negotiations toward inter-state cooperation in the areas of finance and trade.
As table 1 shows, East Asia was engaged in 112 FTAs (in force, under
negotiation or under study) as of June 2007, and there are more to come.
Hence, East Asia's appetite for regional integration is already evident.
However, a key feature of East Asian FTA diplomacy remains unacknowledged
and therefore unaccounted for: the activism displayed in seeking preferential
trading relations with countries outside the region.1
The spread of such cross-regional initiatives leads us to contend that the
still prevalent view of economic integration as a region-bound phenomenon
is empirically outdated, so the motives and implications of cross-regionalism
* We would like to express our gratitude to the Center for International Studies (CIS) at
University of Southern California for generous support and funding for the conference on cross-
regionalism held in the fall of 2005, which brought together all the contributors of this special issue.
We are very thankful for the insightful comments from all our discussants and participants of the
conference and, in particular, for the very generous support of Barbara Stallings and Stephan Haggard.
John Ravenhill also read our papers and gave us useful suggestions. We also thank Jason Enia for his
excellent research assitance. Mireya Solis' research was assisted by a grant from the Abe Fellowship
Program administered by the Social Science Research Council and the American Council of Learned
Societies in cooperation with and with funds provided by the Japan Foundation Center for Global
Partnership.
1 In this special issue, we adopt a pragmatic definition of region as a "contiguous territorial
area having sufficiently clear internal cohesion and definitive external boundaries," which matches
the characterization by the World Bank and the Organization for Economic Co-operation and
Development (OECD) of East Asia as comprising Northeast and Southeast Asia, but excluding the
United States, any of the Latin American countries, Australia, New Zealand, and the Pacific Island
states. See TJ. Pempel, "Introduction: Emerging Webs of Regional Connectedness," in TJ. Pempel,
ed., Remapping East Asia: The Construction of a Region (Ithaca NY, Cornell University Press, 2005), p. 4.
229
Pacific Affairs: Volume 80, No. 2 - Summer 2007
Map 1
Cross-Regional RTAs as of February 2005
Source: Jo-Ann Crawford and Roberto V. Fiorentino. 2005. "The Changing Landscape of
Regional Trade Agreement," WTO Discussion Paper #8, p. 22. Map III: Cross-Regional
RTAs as of February 2005.
deserve further theoretical treatment.2 In fact, conventional theories of

regionalism continue to emphasize geographical proximity as a key
ingredient for the establishment of preferential trade relations in that lower
transportation and transaction costs foster trade concentration, and the
greater likelihood of sharing cultural, economic, linguistic or political ties
facilitate the tasks of policy coordination.3 This emphasis on physical and
cultural proximity is, nevertheless, at odds with the myriad preferential trade
agreements crisscrossing the globe, as can be seen in map 1.
East Asia, however, stands apart in this cross-regional world in one
important way. Whereas European and North American countries pursued
extra-regional partnerships after consolidating their regional blocs,4 East Asian
2 The World Trade Organization's (WTO) own nomenclature also has obscured, rather than
clarified, the importance of cross-regionalism by loosely using the term "Regional Trade Agreements
(RTAs)" to cover all preferential trade deals within and beyond regions. To avoid such confusion, we
make an explicit distinction between regional (RTAs) and cross-regional trade agreements (CRTAs) .
Whenever we refer to preferential trade agreements in general we use the neutral term FTA (or free
trade agreement) .
3 Edward Mansfield and Helen Milner, "The New Wave of Regionalism," International Organization,
vol. 53, no. 3 (1999), pp. 590-91.
4 The one exception is the United States-Israel FTA which preceded the North American Free
Trade Agreement (NAFTA). However, Israel has always been a key strategic priority for the United
States deserving special treatment, and in all other instances CRTAs for Europe and North America
came after their main regional blocs were firmly in place.
230
Introduction: Understanding East Asian Cross- Regionalism
countries embarked on cross-regionalism much sooner, when they were just

beginning to launch their FTA initiatives. Understanding the origins and
dynamics of East Asian cross-regionalism, therefore, gives rise to three main
questions. First, are there regional factors in East Asia itself encouraging
countries to explore cross-regionalism early on? Second, what are the most
important objectives behind the selection of specific cross-regional partners?
Finally, how do CRTAs influence the intra-regional trade initiatives of these
East Asian countries? In sum, will cross-regionalism affect the evolution of
Asian intra-regionalism?
In searching for answers to these pressing questions, we develop here
an analytical framework for studying East Asian cross-regional FTAs to guide
the analyses undertaken by the contributors to this special issue. We seek to
identify the common patterns and fundamental factors behind the East Asian
governments' moves towards establishing CRTAs at the same time as they
launch their intra-regional integration efforts. To that end, we offer first an
overview of the spread of regionalism and cross-regionalism in the world
economy. Next, informed by the existing literature on preferential trading,
we lay out the motivations behind CRTAs in East Asia. We are interested in
identifying the various "environmental" factors that affect all countries in
the region and create incentives for pursuing CRTAs; in addition, we seek to
give proper credit to the diversity of motives spurring East Asian countries
to select specific extra-regional countries as FTA counterparts. In this section,
we pay attention to conventional arguments regarding economic and security
interests behind FTA partner selection, but we also develop a new analytical
category, what we call "leverage," to highlight how cross-regional and intra-
regional FTA initiatives are intimately linked. East Asian countries frequently
choose an extra-regional FTA partner in order to break regional inertias
that hinder integration, to win domestic battles and to appropriate extra-
regional negotiation modalities that they can use in their subsequent intra-
regional FTA negotiations.5 Finally, in the last section of this article, we offer
an overview of the East Asian cross-regional initiatives included in this
collection and draw some conclusions that highlight the value of this project
on empirical, theoretical, and policy-making grounds.
In sum, while we are skeptical that geography shapes economic
integration patterns, given the spread of crisscrossing FTAs, we also believe
that the distinction between cross-regional and intra-regional preferential
trade agreements is a useful heuristic tool in that it allows us to address
hitherto neglected aspects of East Asian regionalism: the simultaneous pursuit
of intra-regional and extra-regional integration initiatives in contrast to the
5 In this way we offer an explanation of cross-regionalism that is distinct from the oft-noted
motivations behind the selection of cross-regional partners: special security relations (US-Israel) ,
former colonial ties (EU-South Africa) , and natural resource diplomacy (Japan and Gulf states, in
negotiation) .
231
American and European practice of solidifying first their regional blocs;

and the larger influence of extra-regional FTA models on East Asian
integration through the systematic use of CRTAs to score leverage points in
regional negotiations.
It is essential to clarify that we are not arguing that RTAs and CRTAs follow
an entirely different logic. As we will show, interest in economic complemen-
tarities and market access, concern over ongoing trade diversion and the desire
to emerge as a visible trade hub are common objectives in FTA negotiations
both regionally and cross-regionally. What we do argue, however, is that East
Asian countries have been more prone to select FTA partners from outside
their region because of the very real constraints they feel in advancing a
regional integration agenda. And that CRTAs offer unique opportunities
for these countries to consolidate their FTA strategies by strengthening trade
negotiation capacity and setting negotiation precedents in a low-risk political
environment as they deal with their cross-regional partners.
A Cross-Regional World
East Asia in a cross-regional world

Spurred by the deepening of the European integration process, the
decision of the United States to embark on ambitious minilateral trade
agreements such as NAFTA, and the uncertainty regarding the General
Agreement on Tariffs and Trade's (GATT) Uruguay Round negotiations,
many countries decided to follow suit and negotiate multiple free trade
agreements.6 However, until recently, one conspicuous laggard region in
this rush towards regionalism was East Asia. Since the infamous attempt by
Japan to establish the "Greater East Asia Co-prosperity Sphere" failed in the
1940s, the region had been known to lack institutionalized cooperation both
in the fields of security and economics.7 The only exception to this dearth of
6 For a more detailed discussion of the reasons behind the proliferation of FTAs, see Jo-Ann
Crawford and Roberto V. Fiorentino, "The Changing Landscape of Regional Trade Agreements,"
WTO Discussion Paper no. 8 (World Trade Organization, Geneva, Switzerland, 2005), p. 16.
i Scholars have explained this shortage of formal institutions in Asia in various ways ranging
from relative disparity shift hypothesis (Grieco); network replacing institutions (Katzenstein and
Shirashi) ; domestic preferences of regional powers (Haggard) ; the region's external reliance especially
on the United States (Crone); to historical US lack of interest in regional mechanisms in Asia
(Katzenstein and Hemmer) . See Joseph Grieco, "Systemic Sources of Variation in Regional
Institutionalization in Western Europe, East Asia, and the Americas," in Edward D. Mansfield and
Helen V. Milner, eds., The Political Economy of Regionalism (New York: Columbia University Press, 1997);
Peter Katzenstein and Takashi Shiraishi, eds., Network Power: Japan and Asia (Ithaca NY: Cornell
University Press, 1997); Stephan Haggard, "Regionalism in Asia and the Americas," in Mansfield and
Milner, eds., The Political Economy of Regionalism; Donald Crone, "Does Hegemony Matter?: The
Reorganization of the Pacific Political Economy," World Politics, vol. 45 (1994), pp. 501-25; and Peter
Katzenstein and Christopher Hemmer, "Why is There No NATO in Asia? Comparative Identity,
Regionalism, and the Origin of Multilateralism," International Organization, vol. 56, no. 3 (2002), pp.
575-607.
232
preferential trade agreements in East Asia was the inauguration of the

Association of South East Asian Nations' (ASEAN) Free Trade Area (AFTA)
in 1992. However, the many sectoral carve-outs and lengthy liberalization
calendars have prevented AJFTA from emerging as a vigorous trade bloc in
the region.8
By the late 1990s, however, East Asia began to experience a flurry of
regional cooperation initiatives in the area of finance (the Asian Monetary
Fund Proposal, the Chiang Mai Initiative, and the Asia Bond Market
Initiative), trade (various bilateral and mini-lateral FTAs), and institution
building of various kinds (ASEAN plus 3, the ASEAN Regional Forum (ARF) ,
and the East Asian Community) . Many researchers attribute this new
phenomenon in Asia to the 1997 Asian financial crisis and argue that the
crisis led Asian governments to feel an urgent need for regional cooperation.9
Meanwhile, others argue that East Asian interests in FTAs, in particular, arose
from fear of exclusion and the economic costs from trade diversion, as Europe
and the Western Hemisphere proceeded with their respective regional
projects.10 Another possible reason is dissatisfaction with the lack of progress
on existing trade forums in the late 1990s: the WTO's Seattle and Canciin
fiascos, and the damage the Asia-Pacific Economic Cooperation (APEC)
suffered over the open rift between the US and Japan over the early voluntary
sectoral liberalization initiative.
The vertiginous pace with which East Asian governments have negotiated
FTAs is evident in table 1. Interestingly, a large number of these preferential
trade deals comprise cross-regional partners. Thus, a noteworthy
development in East Asia's regionalism frenzy is the simultaneous effort to
negotiate intra-regional and cross-regional FTAs. As chart 1 below demon-
strates, all three regions, Europe, North America and Asia, currently engage
in CRTAs. The difference is, however, that both the European Union (EU)
and the North American countries extended most of their cross-regional
interests after they solidified their respective regional arrangements. The
EU only signed its first CRTA with Turkey in 1996, several decades after the
initiation of the process of regional integration.11 The same is true for the
8 Edward Lincoln, East Asian Economic Regionalism (Washington DC: The Brookings Institution,
2004), pp. 169-73.
» For example, Paul Bowles, Regionalism and Development alter the Global Financial Crises,
New Political Economy, vol. 5, no. 3 (2000), pp. 433-55; Michael Wesley, "The Asian Crisis and the
Adequacy of Regional Institutions," Contemporary Southeast Asia, vol. 21, no. 1 (1999), pp. 54-73; and
Christopher W. Hughes, "Japanese Policy and the East Asian Currency Crisis: Abject Defeat or Quiet
Victory?" Review of International Political Economy, vol. 7, no. 2 (2000), pp. 219-53.
10 The most prominent theoretical work on the "domino theory of regionalism" is by Richard E.
Baldwin, "The Causes of Regionalism," The World Economy, vol. 20, no. 7 (1997), pp. 865-88. See also
Walter Mattli, The Logic of Regional Integration: Europe and Beyond (Cambridge; Cambridge University
Press, 1999).
11 Although Europe has had preferential economic relations with former colonies through the
Yaounde and Lome Conventions, these were not structured around FTAs, but rather entailed non-
reciprocal trade concessions, aid and political dialogue. Ravenhill offers an excellent analysis of the
233
Pacific Affairs: Volume SO, No. 2 - Summer 2007
European Free Trade Area (EFTA), whose first CRTAs were with Turkey in
1992 and Israel in 1993. The United States signed one CRTA before NAFTA,
with Israel in 1985, although mostly for strategic reasons. The next CRTA
for the United States would wait another 15 years with the agreement signed
with Jordan in 2001. In sharp contrast, East Asia CRTA negotiations began
to take place simultaneously with bilateral and minilateral negotiations within
the region, raising the question: why?
Chart 1
The Number ofRTAs and CRTAs by Region and by Time
Note: Intra-regional RTAs are double-counted (e.g., one for Japan and one for
Singapore).
* Asia includes both Northeast and Southeast Asia, but excludes South Asia as well
as the Middle East.
** EC/EU is counted as one unit.
*** Thg number for Oceania is small due to the few countries included in this
geographical group.
**** Africa includes North Africa.
Source: JETRO, Sekai to Nihon no shoyou na FTA ichiran (A list of major FTAs of Japan and
the World), December 2005 <http://www.jetro.go.jp/jpn/reports/05000906, online
access, February 2006>.
reasons why the EU pushed for the negotiation of FTAs with African, Caribbean and Pacific (ACP)
countries in the late 1990s. See John Ravenhill, "Back to the Nest? Europe's Relations with the African,
Caribbean and Pacific Group of Countries," in Vinod K. Aggarwal and Edward A. Fogarty, eds., EU
Trade Strategies. Between Regionalism and Globalism (New York: Palgrave Macmillan, 2004).
234
Table 1
East Asia 's Regional and Cross-Regional FTAs as of June 2007
Type of
Countries Agreement Status Year
ASEAN-AFTA RTA In effect 1965,1992
AFTA+CER RTA Agreed to negotiate Scheduled:
2005
ASEAN+China RTA In effect 2003
ASEAN+India CRTA In effect 2004
ASEAN+Japan RTA Under negotiation 2005
ASEAN+ Korea RTA In effect 2006
(except Thailand)
ASEAN+3 RTA Summit conference 2005
Singapore+EFTA CRTA In effect 2003
Singapore-Australia CRTA In effect 2003
Singapore - Bahrain CRTA Pre-Negotiation 2004
Singapore-Canada CRTA Under Negotiation 2001
Singapore-Chile CRTA Under Negotiation 2000
Singapore - Chile - CRTA Under Negotiation 2003
New Zealand
Singapore - China RTA Agreed to negotiate 2004

Singapore - Egypt CRTA Agreed to negotiate 2004
Singapore-Japan RTA In effect 2002
Singapore -Jordan CRTA In effect 2005
Singapore - Kuwait CRTA Under Negotiation 2005
Singapore-New Zealand CRTA In effect 2001
Singapore - Panama CRTA Under Negotiation 2004
Singapore - Peru CRTA Under Negotiation 2004
Singapore - Qatar CRTA Under Negotiation 2004
Singapore - Sri Lanka CRTA Pre-Negotiation 2003
Singapore-Taiwan (China) RTA Proposal/ Study 2002
Singapore-USA CRTA In effect 2004
Thailand -Australia CRTA In effect 2005
Thailand - Bahrain CRTA Framework agreed 2002
Thailand - China RTA In effect 2003
Thailand-Croatia CRTA Proposal 2001
Thailand-Czech Rep. CRTA Proposal 2001
Thailand - Peru CRTA Signed framework 2003
Thailand - India CRTA Signed 2004
Thailand - New Zealand CRTA In effect 2005
Thailand -USA CRTA Negotiation Suspended 2006
Korea-Australia CRTA Official Discussion 2000
Korea - Canada CRTA Under Negotiation 2005
Korea-China RTA Proposal/ Study
235
Type of
Korea-EFTA CRTA In effect 2006
Korea-EU CRTA Under Negotiation 2007
Korea-Chile CRTA In effect 2004
Korea -India CRTA Study 2005
Korea-Japan RTA Under Negotiation 2003
Korea - Malaysia RTA Proposal for study 2004
Korea-Mexico CRTA Official Discussions/ 2004
study
Korea-New Zealand CRTA Official Discussions/ 1999
study
Korea-Singapore RTA In effect 2006
Korea-Thailand RTA Understudy 2001
Korea-USA CRTA Signed 2007
Japan-Canada CRTA Proposal/ Study 2002
Japan-Chile CRTA Signed 2007
Japan-Mexico CRTA In effect 2005
Japan-Thailand RTA Signed 2007
Japan-Phillipines RTA Signed 2006
Japan-Indonesia RTA Basic Agreement 2006
Japan-Malaysia RTA In effect 2006
Japan-Vietnam RTA Under Negotiation 2007
Japan-Bahrein RTA Understudy 2005
Japan-India CRTA Under Negotiation 2007
Japan-Switzerland CRTA Under Negotiation 2007
Japan-Australia CRTA Under Negotiation 2006
Japan-GCC CRTA Under Negotiation 2006
Philippines-USA CRTA Proposal 2002
Philippines - China RTA Under Negotiation
Malaysia - Australia CRTA Under negotiation 2005
Malaysia-India CRTA Under Negotiation 2005
Malaysia-Pakistan CRTA Under Negotiation 2005
Malaysia - New Zealand CRTA Under negotiation 2005
China - Hong Kong RTA In effect 2005
China - Macao RTA In effect 2004
China - SACU CRTA Agreed to negotiate 2004
China - GCC CRTA Agreed to negotiate 2004
China - New Zealand CRTA Under Negotiation 2004
China -Chile CRTA Signed 2005
China -Australia CRTA Under Negotiation 2005
Hong Kong - New Zealand, CRTA Under Negotiation 2001
Taiwan (China) - Panama , CRTA In effect 2004
Taiwan (China) - USA
236
Type of
8 provinces (Guangdong, RTA In effect 2004
Guizhou, Hainan, Jiangxi, Hunan,
Fujian, Yunnan, Sichuan) + 1
autonomous region (Zhonggu
Guangxi Zhuangzu Zizhiqui) +
2 special administrative areas
(Hong Kong, Macao)
Japan - Korea - China RTA Official discuss/study 2000
Pacific 5 RTA Proposal 1998
Pacific 5 - Mercosur - Turkey - CRTA News reports
Afghanistan - Indonesia -
Pakistan -Japan, etc.
USA - Brunei - Myanmar - CRTA Partly Under
Cambodia - Indonesia - Laos - Negotiation
Malaysia - Philippines -
Singapore - Thailand - Vietnam
Korea - Argentina - Brazil - CRTA Agreed to study
Paraguay - Uruguay
Source: JETRO, Sekai to Nihon no shoyou na FTA ichiran, December 2005 <http://
www.jetro.go.jp/jpn/reports/05000906, on-line access, February 2006>
Updates made by authors from WTO data base and relevant government websites.
Theories of cross-regionalism: One step behind
The literature on the "new wave" of regionalism of the late 1980s and
1990s does not entertain the possibility that cross-regional arrangements
could have a major role to play in our understanding of regionalism.12 A
somewhat scant literature on the phenomenon of cross-regionalism exists,
however. On the theoretical front, Aggarwal and Koo advocate a nuanced
distinction among "trade governance measures."13 One of the criteria they
employ to categorize various trading arrangements in the world is physical
proximity, with a distinction made between "geographically concentrated"
and "geographically dispersed" trading arrangements.14 In this way, these
authors explicitly acknowledge the presence of cross-regional dynamics. The
thrust of their analysis, however, is the categorization of a variety of
12 See especially Mansfield and Milner, "The New Wave of Regionalism."

13 Vinod K. Aggarwal and Min Gyo Koo, "Beyond Network Power? The Dynamics of Formal
Economic Integration in Northeast Asia," The Pacific Review, vol. 18, no. 2 (2005), pp. 189-216.
14 In Aggarwal and Koo's own words: " pair of countries are geographically concentrated, if they
are contiguous on land or within 400 nautical miles; otherwise, we view them as being geographically
dispersed" ("Beyond Network Power," p. 196).
237
arrangements that fall under the rubric of regional institutions and not a
discussion of the interaction between geographically dispersed and
concentrated FTAs. Aggarwal and Fogarty focus on the EU's attempts to
promote counterpart coherence (by developing cooperation dialogues
among regional entities) ,15 and Hanngi, Roloff and Ruland discuss the forms
and functions of inter-regional relations as a part of institutional balancing.16
Both arguments are different from what we document in East Asia: a much
more fragmented negotiation process where there is no tight regional block
(customs union) but rather where bilateral RTAs and CRTAs dominate the
trade negotiation scene.
Among economists, the best-known debate on the subject centres on
the natural trading partner hypothesis endorsed by Wonnacot and Lutz,
Summers, and Krugman, and rejected by Bhagwati and Panagariya.17 The
proponents of the hypothesis insist that when FTA partners are "natural
partners" with high initial volume of trade and a close distance between
them, their FTA engagement maximizes trade creation and efficiency gains.18
Its opponents, however, argue that the welfare implications of cross-regional
and intra-regional FTAs are not so straightforward given the reduction of
transportation costs and the elasticity of export supply curves. While this
debate among economists continues to generate new insights,19 it is
insufficient to explain East Asian cross-regionalism because a host of other
factors - and not exclusively efficiency gains - are likely to influence a
government's decision to engage simultaneously in preferential trading
negotiations with its neighbours and its extra-regional partners.
Finally, the concept of "open regionalism" actually helps in theorizing
about the origin of cross-regionalism.20 Invoking Pempel's notion of
15 Vinod K. Aggarwal and Edward A. Fogarty, "Between Regionalism and Globalism: European
Union Interregional Trade Strategies," in Aggarwal and Fogarty, eds., EU Trade Strategies: Between
Regionalism and Globalism.
16 Heiner Hanggi, Ralf Roloff and Jurgen Ruland, "Interregionalism: A New Phenomenon in
International Relations," in Heiner Hanggi, Ralf Roloff and Jurgen Ruland, eds., Interregionalism and
International Relations, (London: Routledge, 2006) .
17 See Paul Wonnacott and Mark Lutz, "Is There a Case for Free Trade Areas?" in Jeffrey J.
Schott, ed., Free Trade Areas and US Trade Policy (Washington DC: Institute for International Economics,
1989); Larry Summers, "Regionalism and the World Trade System," Symposium Sponsored by the
Federal Reserve Bank of Kansas City, Policy Implications of Trade and Currency Zones, 1991; Paul Krugman,
"The Move to Free Trade Zones," Symposium Sponsored by the Federal Reserve Bank of Kansas City,
Policy Implications of Trade and Currency Zones, 1991; Jagdish Bhagwati and Arvihd Panagariya,
"Preferential Trading Areas and Multilateralism - Strangers, Friends, Or Foes?" in Jagdish Bhagwati
and Arvind Panagariya, eds., The Economics of Preferential Trade Agreements (Washington DC: AEI Press,
1996).
18 Wonnacot and Lutz, "Is There a Case for Free Trade Areas," pp. 62-72.
19 For example, see Maurice Schiff, "Will the Real "Natural Trading Partner" Please Stand Up?"
World Bank, Development Research Department, 1999.
20 APEC best exemplifies the notion of "open regionalism" - that is, a negotiated trade
liberalization effort whose benefits are always extended to non-APEC members on the basis of most
favoured nation status.
238
"embedded mercantilism" in his analysis of Japanese political economy,

Jayasuriya notes that "open regionalism" a la APEC was promoted under a
"particular configuration of power and interests in the domestic and external
economy" and, in order to maintain the policy environment of "embedded
mercantilism," Asian governments made "open regionalism... not about
regional market making but about maintaining export markets."21 Such
efforts have been important for Asian governments trying to maintain
domestic harmony by supporting internationally competitive industries and
at the same time providing side payments to less economically advanced
sectors under embedded mercantilism. This analysis is quite useful in
investigating the reasons behind Asia's reluctance to form a regional "bloc"
that would risk separating the region from valuable extra-regional export
markets. Nevertheless, this argument only makes sense in the context of
East Asian cross-regional overtures to large countries such as the United
States and Europe; it does not explain how cross-regional FTAs with countries
that have relatively small markets, such as Chile, Mexico, Australia or New
Zealand, would benefit Asia's "embedded mercantilism."
We can find a slightly larger accumulation of empirical studies of Asian
cross-regional FTAs, and as the numbers of those initiatives increase, we
expect more studies to emerge. Ravenhill analyzes the "new bilateralism"
pursued by East Asian governments in recent years and concludes that those
initiatives emerge from (a) an increasing awareness of the weakness of
existing regional institutions, (b) an expectation of positive demonstration
effects, and (c) a positive impact in reforming domestic economic interests.
He also argues that by engaging in bilateral FTAs that exploit the ambiguities
in WTO rules, Asian negotiators are trying to exclude sensitive domestic
sectors. Nevertheless, he has yet to incorporate the dynamics that could exist
between cross-regional initiatives and intra-regional ones.22 Dent also
examines the expansion of what he calls "Asia-Pacific Bilateral Free Trade
Agreement (APBFTA)" projects and observes the emergence of "lattice
regionalism," the many bilateral trade arrangements converging towards
economic integration in Asia.23 Although Dent includes cross-Pacific
arrangements in his analysis, the interaction among these arrangements is
not explicitly discussed. Finally, the collection of work in Aggarwal and Urata
21 Kanishka Jayasuriya, "Embedded Mercantilism and Open Regionalism: The Crisis of a Regional
Political Project," Third World Quarterly, vol. 24, no. 2 (2003), pp. 339-41. See also TJ. Pempel, Regime
Shift: Comparative Dynamics of the Japanese Political Economy (Ithaca NY: Cornell University Press, 1997).
22 At the time of writing (probably either late 2002 or early 2003) , he remained skeptical about
the conclusion of both the Japan-Mexico or South Korea-Chile agreements, for both Japan and South
Korea remained fairly resistant to the idea of liberalizing their respective agriculture sectors. See
John Ravenhill, "The New Bilateralism in the Asia Pacific," Third World Quarterly, vol. 24, no. 2 (2003),
p. 314 and footnote 29.
23 Christopher M. Dent, "Networking the Region? The Emergence and Impact of Asia-Pacific
Bilateral Free Trade Agreement Projects," The Pacific Review, vol. 16, no. 1 (2003), pp. 1-28.
239
provides a comprehensive coverage and systemic analysis of bilateral trade

negotiations conducted by East Asian governments.24 Their work discusses
various factors that motivate each government to pursue trade bilateralism.
Even this comprehensive collection does not cover a systematic analysis of
theroleofCRTAs.
More specifically, some studies on individual cases of cross-regional tra

negotiations undertaken by East Asian governments are now available.
underscores the power of trade and investment diversion across regio
explain the Japan-Mexico FTA; and Manger highlights the importan
Japanese multinational corporations (MNCs) in lobbying for this
negotiation.25 Koo examines the shift from multilateralism to bilateralism in
South Korean trade strategy by focusing on its first ever bilateral FTA
concluded with Chile along with other ongoing FTA negotiations.26 Tongzon
focuses on the US-Singapore Free Trade negotiations and discusses possible
detrimental effects on ASEAN. 27 Although rich in details and intriguing in
coverage, these studies tend to be either a single case study, or fail to place
the phenomenon of "cross-regionalism" within the country's overall
preferential trade efforts. Comparative and theoretically driven empirical
analyses which contextualize the governments' motivations behind cross-
regional initiatives in international relations and domestic politics would
likely advance our understanding not only of the cross-regional phenomenon
but also of the current wave of regionalism in East Asia.
Explaining East Asian Cross-Regionalism
The previous section made clear that an understanding of the factors

behind the spread of preferential trading relations across regions is just
beginning to emerge. Building upon the previous literature on regional
and extra-regional integration, we seek to identify the most powerful forces
that convince governments and interest groups to invest political capital
towards the construction of cross-regional FTAs. We proceed first by
identifying common regional factors in East Asia that have created an
environment conducive to the exploration of cross-regional partnerships.
Next, we lay out the various distinctive objectives and motivations that
influence certain East Asian governments in their selection of specific extra-
24 Vinod K Aggarwal and Shujiro Urata, eds., Bilateral Trade Agreements in the Asia-Pacific: Origins,
Evaluation, and Implications (London: Routledge, 2005).
25 Mireya Solis, "Japan's New Regionalism: The Politics of Free Trade Talks with Mexico ," Journal
of East Asian Studies, vol. 3 no. 3 (2003), pp. 377-404. Mark Manger, "Competition and Bilateralism in
Trade Policy: The Case ofjapan's Free Trade Agreements," Review of International Political Economy, vol.
12, no.5 (2005), pp. 804-28.
26 Min Gyo Koo, "From Multilateralism to Bilateralism? A Shift in South Korea's Trade Strategy,"
in Aggarwal and Urata, eds., Bilateral Ttade Arrangements in the Asia-Pacific.
27 Jose L. Tongzon, "Research Notes: US-Singapore Free Trade Agreement: Implications for
ASEAN," ASEAN Economic Bulletin, vol. 20, no. 2 (2003), pp. 174-78.
240
regional FTA counterparts. By laying out these possible explanations in a

systematic manner, we hope to generate testable hypotheses that can help
us understand the contours of East Asian cross-regionalism as explored in
the specific case studies that follow this introductory article.
Regional factors favouring cross-regionalism
Economic factors
In the recent past, East Asia has experienced significant economic

changes as regional economic interdependence grows and especially as China
acquires a much larger presence in regional trade and investment flows.
These trends notwithstanding, East Asian nations continue to rely heavily
on cross-regional markets (notably the United States) as outlets for exports
and as sources for imports and inflows of investment capital. Economic
realities, therefore, continue to weaken the rationale for pursuing exclusively
intra-East Asian regionalism.
In the past twenty years, we have witnessed the intensification of economic
exchange within East Asia, both in terms of trade and investment flows. For
instance, the share of intra-regional trade among fifteen East Asian countries
grew from 34.7 percent in 1980 to 54 percent in 2003.28 Scholars argue that
intra-regional trade in East Asia measured by the more accurate intra-regional
trade index demonstrates actually higher level of integration than Europe
and only a notch below NAFTA.29 In terms of foreign direct investment (FDI) ,
the emergence of Asian production networks with an FDI boom by Japanese
MNCs after the 1985 yen appreciation, the spread of ethnic Chinese business
groups in the region, and the growing direct investments abroad from countries
such as Korea, Taiwan and more recently China, have also received wide
attention.30
These facts notwithstanding, East Asia is not, by any means, evolving into
a self-contained economic bloc. As Lincoln notes, the evolution of the intra-
regional trade intensity index over time does not reveal a major intensification
of economic exchange in recent years.31 Kawai 's own figures reveal that this
28 This group of fifteen East Asian economies includes ASEAN, Japan, Korea, China, Taiwan and
Hong Kong. Figures are taken from Masahiro Kawai, "East Asian Economic Regionalism: Progress
and Challenges," Journal of Asian Economics, vol. 16 (2005), p. 32.
29 The index value for East Asia is 2.2, while it is 2.5 for NAFTA and 1 .7 for Europe; see Kawai, East
Asian Economic Regionalism," p. 32. The intra-regional trade intensity index takes into account the
weight of a region in the overall world economy to avoid overestimating the importance of intra-regional
trade for regions that are registering above-average growth. See Lincoln, East Asian Economic Regionalism.
30 See Walter Hatch and Kozo Yamamura, Asia in Japan s Embrace: Building a Regional Production
Alliance (Cambridge: Cambridge University Press, 1996) ; Roger van Hoesel, New Multinational Enterprises
from Korea and Taiwan: Beyond Export-led Growth (New York: Routledge, 1999) ; Mireya Soils, Banking on
Multinationals: Public Credit and the Export of Japanese Sunset Industries (Stanford: Stanford University
Press, 2004).
31 Lincoln, East Asian Economic Regionalism, p. 47.
241
index has fluctuated between 2.5 and 2.2 between 1980 and 2003. Moreover,
the importance of extra-regional MNCs remains evident. For example,
between 1990 and 2002, the United States was the largest foreign investor in
Asian newly industrialized economies (NIEs) and in China (with $70.6 and
$42.7 billion, respectively) . Only in the case of the ASEAN-9 was most of the
FDI intra-regional (with Japan as the largest foreign investor with a cumulative
total of $19.8 billion) . European multinationals were also active in the region,
representing 14 percent of foreign investment in Asian NIEs, 22 percent in
the ASEAN-9, and a smaller 6.2 percent in China during this same period.32
In fact, Lincoln argues that one of the most important developments on
the trade front in East Asia is a redirection of intra-regional trade away from
Japan and into China. Particularly notable are Japan's increasing imports
from China (from 4 to 17 percent of total imports between 1981 and 2001)
and growing exports from the rest of Asia to China (from 5 to 12 percent in
the same period). Both trends reflect the rapid rise of China as a major
trading nation. Although these are indeed important changes, the main
continuity is also equally revealing; the United States continues to be the
most important trading partner for the region.33 Between 1980 and 1989,
24.4 percent of East Asian exports were directed to the American market.
And between 1995 and 2004, the United States remained the main
destination market capturing 20.7 percent of total exports.34
This overview of economic trends in East Asia demonstrates that, despite
fairly intense intra-regional economic activities, countries in the region
remain heavily dependent on extra-regional markets - especially the United
States - as outlets for their exports and as sources of FDI. Therefore, to the
extent that these East Asian countries wish to consolidate or expand access
to some of their main markets of destination, they will frequently look across
the Pacific and outside their immediate economic region.35
Security and diplomatic factors
The security environment in East Asia has not been conducive to the
creation of regional trade governance institutions for at least three main
reasons: the prevalence of a hub-and-spoke alliance system, the open dislike
32 All figures from Kawai, "East Asian Economic Regionalism," pp. 32- 33.
33 Lincoln, East Asian Economic Regionalism, pp. 51, 55, 58.
34 IMF, Direction of Trade Statistics.
35 See Naoko Munakata, "Has Politics Caught up with Markets? In Search of East Asian Economic
Regionalism," in Peter J. Katztenstein and Takashi Shiraishi. eds., Beyond Japan: The Dynamics of East
Asian Regionalism (Ithaca NY: Cornell University Press. 2006) . However, as we will elaborate later on in
this and the subsequent articles in this volume, the objective of securing preferential access with key
extra-regional economic partners is by no means the most important rationale behind many cases of
East Asian cross-regionalism. Rather, more defensive economic reasons (counter trade diversion) or
security and leverage motives frequently guide the selection of cross-regional partners at this early
stage in East Asia's FTA diplomacy.
242
of the extra-regional hegemon for exclusive Asian bloc initiatives, and the
unabated historical and regional tensions among neighbours in East Asia.
First, the historical context is important to understand the emergence
and persistence of a hub-and-spoke alliance system in Asia. In sharp contrast
to the development of a trans-Atlantic alliance in the form of die North
Adantic Treaty Organization (NATO) , a trans-Pacific collective defense system
never materialized in East Asia.36 In order to understand Asia's "organization
deficit" and the prevalence of bilateral security arrangements, Calder and
Ye argue that it is necessary to factor in historically contingent choices. In
particular, the Chinese intervention in the Korean War exerted a powerful
influence in the institutional infrastructure for Asia. Confronted with this
crisis, the US government shelved its preferred project of a region-wide
collective security mechanism (the Pacific Pact) in favour of a network of
bilateral alliances with selected Asian countries (the San Francisco system).
The desire to reach an early peace settlement with Japan, given concerns
over aggressive Chinese behaviour, was at the heart of this decision. The
implications of this security arrangement for the future of Asian regionalism
were, of course, enormous. Instead of forging a security bond that could
help these nations overcome their distrust and manage regional frictions,
they remained isolated from one another interacting individually with the
United States as their main bilateral security partner.37 The absence of a
minilateral collective security organization in East Asia, therefore, hindered
the construction of regional economic regimes in as much states are more
likely to trade with their allies since they do not fear the security externalities
of such economic exchange.38
Second, the United States has influenced the fate of Asian regionalism
not only in its role as the architect of the underlying security structures that
condition trade choices, but also by actively discouraging the emergence of
an Asian economic bloc. Contrary to its permissive attitude towards European
integration, the United States has frowned upon purely Asian integration
initiatives.39 In the aftermath of World War II, the United States came to
support the European Community project for three main reasons: to
strengthen its allies, to promote demand for American goods and investment
as European nations recovered and to encourage more prosperous European
nations to make a larger contribution to the defense burden.40
36 See Katzenstein and Hemmer, "Why is There No NATO in Asia?"

37 Kent Calder and Min Ye, "Regionalism and Critical Junctures: Explaining the 'Organization
Gap' in Northeast Asia." Journal of East Asian Studies, vol. 4 (2004), pp. 204-08.
38 See Joanne Gowa, Allies, Adversaries, and International Trade (Princeton: Princeton University
Press, 1994); and Edward D. Mansfield and Rachel Bronson, "The Political Economy of Major-Power
Trade Flows," in Mansfield and Milner, eds., The Political Economy of Regionalism.
39 Peter Katzenstein, A World of Regions; Asia and Europe in the American Imperium (Ithaca NY;
Cornell University Press, 2005) , pp. 50-60.
40 Mattli, The Logic of Regional Integration, p. 71.
243
The first official blueprints for an exclusive Asian economic grouping,

however, took place in a very different security context from that of Europe,
and drew a very different American response. When Malaysia's Prime Minister
Mahathir proposed the creation of an East Asian economic group in 1990,
the United States expressed its disapproval, and the initiative was shelved.
Instead, APEC became the venue of choice for the discussion of multilateral
regionalism. Some key nations in the region (Japan) supported the APEC
initiative precisely because it circumvented US opposition to the creation of
an exclusive Asian economic club.41 A decade later, the United States once
more reacted negatively to another proposal to develop an Asian regional
institution, this time to deal with monetary cooperation. When the Japanese
government launched its 1997 Asian Monetary Fund (AMF) proposal, it
struck a chord with many Asian countries that were disappointed with the
hands-off American approach towards the crisis in Thailand as well as with
the actions of the International Monetary Fund (IMF) in dealing with the
regional financial crisis.42 For the United States, the AMF threatened to
undermine the IMF's role as the guardian of international financial
governance and raised the specter of supplying Asian countries with funds
that lacked conditionality strings. Given the resolute opposition from the
United States, the AMF initiative was pushed aside quickly. Concern over
narrow Asian economic integration initiatives that could produce significant
trade diversion has been a concern of elites in the United States.43 Due to
the central role that the United States plays in the most serious hotspots of
the region (the North Korean nuclear program and the Taiwan Strait) , Asian
governments cannot completely disregard the preferences of the extra-
regional hegemon against an inward-looking regional bloc.44
Finally, the fact that East Asia is a region divided by geopolitics and
historical legacies further complicates the chances of embarking on closer
economic integration. Cold War era confrontations are still very much alive
in a region with the few surviving communist states and with the North Korean
41 Yoichi Funabashi, Asia Pacific Fusion: Japan's Role in APEC (Washington DC: Institute for
International Economics, 1995), pp. 105-18. Ellis Krauss, "Japan, the US, and the Emergence of
Multilateralism in Asia," The Pacific Review, vol. 13, no. 3 (2000), pp. 473-94.
42 See Saori N. Katada, Banking on Stability: Cross-Pacific Dynamics of International Financial Crisis
Management (Ann Arbor: University of Michigan Press, 2001 ) . The one important exception was China,
which opposed the AMF. Bowles notes that the Chinese opposed the idea because they feared this
initiative would enhance Japan's leadership position in the region, while Amyx notes that the Japanese
government, going through the Hong Kong Monetary Authority first, made it harder for the Chinese
authorities to reach a decision. Paul Bowles, "Asia's Post-Crisis Regionalism: Bringing the State Back
In, Keeping the (United) States Out," Review of International Political Economy, vol. 9, no. 2 (2002), pp.
255-56; Jennifer Amyx, "What Motivates Regional Financial Cooperation in East Asia Today?" Asia
Pacific Issues, no. 76 (February 2005) , pp.2-3.
43 The United States has not reacted strongly against its exclusion from the East Asia Summit
held in Kuala Lumpur because it remains skeptical it can yield an inclusive regional block given the
open disagreements between China and Japan over the future evolution of this forum.
44 Lincoln, East Asian Economic Regionalism, pp. 256-57.
244
campaign to develop nuclear weapons. Moreover, Japanese aggression during

World War II and dissatisfaction with Japan's accountability for past deeds
have made it very difficult to generate relations of trust among neighbours.
In general, the typical national development strategy adopted by Northeast
Asian governments of "catching up" with the West, along with a strong sense
of nationalism and competition, left those countries reluctant to compromise
their sovereignty for the sake of benefiting neighbours.45
The contrast with Europe could not be starker when it comes to the role
of regional hegemons. In Europe, the two countries, France and Germany,
with a long history of animosity and warfare joined a security alliance (NATO
in 1949) almost at the same time they took the first steps to integrate
economically (the Schuman Plan of 1950) . In East Asia, instead of facilitating
regional cooperation, growing discord between China and Japan constitutes
a formidable obstacle to region-wide integration. Japan and China stood at
the opposite ends of the Cold War divide and have not come closer in this
era of American unipolarity. On the contrary, these nations see themselves
as potential rivals in the construction of Asian regional institutions,
competitively courting ASEAN, for example. Furthermore, their bilateral
relations have recently soured at the time when their respective governments
proposed various initiatives including regional preferential trade agreements
and security dialogues.46 This climate of open rivalry and friction among
would-be regional hegemons significantly clouds the prospects of devising
region-wide economic arrangements and institutions. There are significant
hurdles in the path of intra-regional cooperation, and they are visible in the
minimal progress made in the negotiation of a China-South Korea-Japan
FTA and open reluctance at least on the Japanese side to embark on FTA
negotiations with China.47
Diversity in Motives: Explaining Cross-regional Partner Choices
As noted above, East Asian nations are exposed to a number of regional

or environmental factors which encourage them to consider cross-
regionalism as an important component of their overall FTA strategy. These
factors include the weight of extra-regional markets, the persistence of
45 Gilbert Rozman, Northeast Asia 's Stunted Regionalism: Bilateral Distrust in the Shadow of Globalization
(Cambridge: Cambridge University Press, 2004) .
46 The factors that have led to the souring of the Sinojapan bilateral relations are many, including
the phasing out of Japanese official development assistance (ODA) loans, a bilateral trade imbalance
and occasional trade wars, the exploitation of gas reserves on the East China Sea, pending territorial
disputes, the Japanese bid for a permanent seat at the UN Security Council, controversy over the
official visits in Japan to the Yasukuni shrine, approval of history books that downplay wartime atrocities
and the antijapanese riots in China.
47 Authors' interviews with officials from Japan External Trade Organization (JETRO) , Ministry
of Economy, Trade, and Industry (METI), and Japanese politicians, summer 2005.
245
Pacific Affairs: Volume 80, No.. 2 - Summer 2007
Table 2
Main rationales behind the selection of cross-regional FTA partners

Matrix of hypotheses
Motive Rationale
Economic
Market access The search for new and/ or expanded market access through
preferential trade and investment liberalization.
Trade diversion The attempt to avoid exclusion and level the playing field by
countering trade and investment diversion effects of existing
FTAs.
Seeurily Security
Reinforce The desire to use economic diplomacy in order to cement

security ties with the main (extra-regional) security guarantor,
arrangements
Raise inter- The desire to exercise "benign" leadership on a wide stage

national status through collaborative economic projects or to increase a
country's international image as a trade hub.
Leverage Leverage
Creating a) The wish by policy-makers to "lock-in" controversial

precedents economic reforms, thereby fending-off domestic
opponents and enhancing the international credibility
of the state as an intra-regional FTA negotiator,
b) The attempt to establish precedents on negotiation
modalities to be incorporated in subsequent FTA or
WTO negotiations.
Capacity The need to develop negotiating techniques and qualified
building bureaucratic cadres so as to avoid entrapment in disadvan-
tageous commitments and/ or gain advantage in future FTA
negotiations with larger economic partners.
regional security cleavages, historical animosities and territorial disputes and

discouragement from the United States to develop an exclusive Asian bloc.
Yet the very different choices these East Asian governments have made as
they pick their cross-regional FTA partners also reflect an important diversity
in motives regarding partner selection. We turn next to a discussion of the
most important motivations in the pairing of East Asian countries with extra-
regional counterparts as they flesh out their FTA strategies (see table 2) .
Economic motives
The search for new and/or expanded market access through preferential
trade and investment liberalization is undoubtedly a powerful determinant
of partner selection. An FTA can serve as an institutional device to create
246
trade opportunities among economies with a high degree of economic

complementarities or to manage highly interdependent economies by
lowering transaction costs and providing new rules addressing this deeper
level of de facto integration. This is, indeed, the insight of a well established
theory of regional integration - neofunctionalism.48 The basic idea is that as
flows of intra-regional trade and investment increase, the private sector will
call for the creation of supranational institutions that allow them both to
reduce the uncertainty and transaction costs surrounding these economic
transactions and to reap the benefits of larger markets.49
Others, however, have disagreed with the neofunctionalist argument that
governments agree to pool sovereignty mostly to manage the technical issues
created by expanding economic transactions. For instance, Grossman and
Helpman, in their well-known domestic political economy models of FTA
lobbying, underscore a more strategic, if not rent-seeking, rationale for
producer groups to demand free trade negotiations. In their view, exporting
interests will attempt to use FTA negotiations to secure preferential access
to higher priced regional markets enjoying the protection of restrictive rules
of origin and hefty external tariffs.50
The spread of regionalism in the world economy has largely been
interpreted as a defensive reaction to this first-mover advantage that
producers within a bloc obtain through their preferential status. This is known
as the "domino effect," whereby countries seek membership in existing blocs
(or, if turned down, they devise their own integration arrangements) in order
to minimize the trade and investment diversion resulting from regional
preferences.51 The disadvantages for outsiders include not only higher tariffs
but also stiff rules of origin, inability to reap regional economies of scale,
48 Ernst Haas, Beyond the Nation-State (Stanford: Stanford University Press, 1964). Although
economic objectives (managing growing interdependence) are of central importance in explaining
the demand for regional integration, neofunctionalism is essentially a political explanation in that it
explains how the lobbying activities of interest groups to establish supranational institutions that
erode state autonomy will move forward the integration process. We thank an anonymous reviewer
for pressing us to clarify this important point.
49 See Mattli, The Logic of Regional Integration. In fact, Bhagwati, Greenaway and Panagariya argue
that the trade creation effect may be larger in cross-regional FTAs (contrary to the expectations of the
natural trading partner hypotheses) due to the reduction in transportation costs and the greater
elasticity of export curves with more distant partners. See Jagdish Bhagwatti, David Greenaway and
Arvind Panagariya, "Trading Preferentially: Theory and Policy," The Economic Journal, vol. 108 (1998),
pp. 1128-48.
50 See Gene M. Grossman and Elhanan Helpman, "The Politics of Free-Trade Agreements," The
American Economic Review, vol. 85, no. 4 (1995), pp. 667-90. In fact, preferential rules of origin are now
considered one of the most pernicious elements of FTAs in that they provide an effective and hidden
form of protection for bloc producers. We thank Steph Haggard for pointing this out to us. Some of
the best works on rules of origin are by Anne O. Krueger, "Free Trade Agreements as Protectionist
Devices: Rules of Origin." Working Paper no. 4352 (Cambridge: National Bureau of Economic
Research, 1993) ; and Antoni Estevadeordal and Kati Suominen, "Rules of Origin in Preferential Trading
Arrangements: Is All Well with the Spaghetti Bowl in the Americas?" Economia (2005), pp. 63-103.
51 See Baldwin, "The Causes of Regionalism."
247
deteriorating terms of trade and stricter investment rules on their multi-

national corporations. Aid diversion - as wealthy members of the bloc focus
their donor activities on less affluent members - has also been flagged by
Mattli.52 These disadvantages may generate a strong lobbying response.
Baldwin makes the persuasive point that producer groups will lobby harder
for FTA membership than to rescue troubled multilateral talks, since failure
at the multilateral level results in a missed opportunity for everyone, whereas
uncorrected regional discrimination weighs heavily on non-member
producers.53
Moreover, this focus on the gains to specific industries from cross-FTA
initiatives helps explain apparent anomalies, such as when distant nations
with modest trade flows are nevertheless willing to pay the costs of negotiating
formal trade agreements. In other words, shoring up the interests of a few
industries with large extra-regional interests may help account for these FTAs
despite lackluster aggregate trade figures.
Economic objectives, therefore, can exert a powerful influence over the
cross-regional choices of East Asian nations. Countries in this region that
depend heavily on outside markets may wish to reduce transaction costs and
market access uncertainty through a new trade governance structure (FTA)
with extra-regional partners. Moreover, to the extent that specific industries
rely heavily on extra-regional markets, these producer groups will also be
very susceptible to any changes in the rules of market operation in that
destination country, such as the decision to join a regional bloc. Under those
circumstances, Baldwin's domino effect is likely to unfold as the high trade
and investment diversion costs will persuade disadvantaged exporters and
investors outside the region to lobby for a cross-regional FTA. Preferential
trading therefore is essential to restore the level playing field in terms of
market access across regions.
Security and diplomacy motives
The use of economic diplomacy to serve larger security interests is an old

practice widely studied in international political economy.54 FTAs are inter-
governmental negotiations, and as such they not only reflect policy-makers'
response to the demands of business lobby groups but can also be guided by
a number of non-economic priorities in a state's agenda. The desire to
overcome distrust among traditional rivals (German-Franco accommodation
in the European Community) , to form a common front vis-a-vis external
52 See Mattli, The Logic of Regional Integration, p. 60.

53 See Baldwin, "The Causes of Regionalism," p. 879.
54 Perhaps one of the most compelling accounts of such practice remains Hirschman's study of
Nazi Germany's use of economic diplomacy to create webs of asymmetrical dependence to increase
its power among neighbours. See Albert O. Hirschman, National Power and the Structure of Foreign Trade
(Berkeley: University of California Press, 1980) .
248
threats (ASEAN's anti-Communist stance), to cement security ties with

powerful countries, to avoid diplomatic isolation and to acquire greater
visibility in world affairs are just a few examples.55 In other words, states'
commercial policies are not only conditioned by the broader security
environment they operate in, but states seek to use tools of economic
diplomacy to reinforce security arrangements as well.
In addition, FTA talks can be used as a tool to improve the countries'
status and image by allowing them, on the one hand, to display "benign
leadership" through collaborative economic projects. For example, the
remarkable rise of China has generated strong concerns about its systemic
repercussions in the fields of economics (with Chinese products flooding
world markets) , energy (with oil prices skyrocketing given China's voracious
consumption needs) and security (with distrust over China's growing military
capabilities) . In order to quell these concerns, the Chinese government has
attached utmost importance to the idea of its "peaceful rise."56 Demonstration
of benign leadership, in the form of economic cooperation, is an essential
element of such a strategy. China's first FTA with ASEAN was very much
informed by this goal. For example, Kwei shows that political considerations
(engaging Southeast Asia) were central to the Chinese decision to negotiate
with ASEAN, despite the absence of strong economic complementarities.57
China's need to stabilize its external environment as it rises to great power
status could very well lead to the more active utilization of FTA diplomacy,
both within and outside the region.
On the other hand, FTAs can also be used to improve the country's
status by gaining international recognition. The World Bank directly ad-
dresses this point when it notes that many countries engage in FTA nego-
tiations in order to "be noticed."58 Emerging as a "trade hub nation" through
a network of FTAs can be a useful venue to raise a country's international
status.59
The desire to achieve security and diplomatic goals, such as reinforcing
security ties and developing a tool to improve the country's image or status
55 See Mansfield and Milner, "The New Wave of Regionalism"; Mattli, The Logic of Regional.
Integration; World Bank, Trade Blocs (New York: Oxford University Press, 2000); Vinod K. Aggarwal,
"Bilateral Trade Arrangements in the Asia-Pacific," in Aggarwal and Urata, eds., Bilateral Trade
Arrangements in the Asia-Pacific, Stephen Hoadley, Negotiating Free Trade: The New Zealand-Singapore CEP
Agreement (Wellington: New Zealand Institute of World Affairs, 2002) .
56 Zheng Bijian, "China's 'Peaceful Rise' to Great-Power Status," Foreign Affairs, vol. 84, no. 5
(2005), pp. 18-24.
5V Elaine S. Kwei, "Chinese Trade Bilateralism: Politics still in command," in Aggarwal and Urata,
eds., Bilateral Trade Arrangements in the Asia-Pacific, p. 133., And Wong and Chan point to lack of
complementarities in trade structures between China and ASEAN; see John Wong and Sarah Chan,
"China-ASEAN Free Trade Agreement: Shaping Future Economic Relations," Asian Survey, vol. 43,
no. 3 (2003), pp. 516-23.
58 World Bank, Trade Blocs, p. 19.
59 Alejandro Ibarra-Yunez, "Spaghetti Regionalism or Strategic Foreign Trade: Some Evidence
for Mexico," Journal of Development Economics, vol. 72 (2003) , pp. 567-84/
249
in world economic affairs can, therefore, serve as important motivations

behind some of the cross-regional initiatives to be analyzed here. Linking
FTA policy with the country's security and diplomatic goals can be critical
when dealing with cross-regionalism partners.
Leverage motives
Cross-regional negotiations do not take place in a vacuum. On the contrary,
governments frequently pursue simultaneously inter- and intra-regional
negotiations. What happens in one negotiating front can affect what ensues
in the other, and states have not missed this point. In fact, an important
motive in embarking early on in cross-regionalism is to acquire leverage
over the evolution of intra-regional integration through at least two main
mechanisms, capacity building and precedent setting.
Just as East Asia embraced FTA diplomacy for the reasons noted above,
the lack of regional know-how in the negotiation of such agreements became
readily apparent.60 East Asian governments seeking "on-the-negotiation"
training by teaming up with consummate preferential traders had to look
beyond the region.61 Therefore, an important motive in the selection of
cross-regional FTAs, we posit, is the need to develop negotiating techniques
and qualified bureaucratic cadres so as to avoid entrapment in
disadvantageous commitments and/or to gain advantage in future FTA
negotiations with larger economic partners.
Governments may also embark on cross-regional integration in order to
set precedents - both domestically and internationally - which can be useful
in future FTA negotiations. A powerful insight from the literature on
intergovernmentalism is that states favour preferential integration
negotiations to gain leverage over domestic interest groups.62 States can use
selective trade liberalization to minimize the future political clout of import-
competing industries expected to shrink after exposure to international
competition.63 FTA commitments can also help lock in these reforms. CRTA
negotiations, therefore, allow states to win their political battles at home,
paving the way for more vigorous regional integration diplomacy.
Internationally, states can use CRTAs to boost their reputation as reliable
FTA partners, and to establish precedents in key areas (e.g., exclusion of
60 Jiro Okamoto, "Introduction," injiro Okamoto, ect., Whither Free Trade Agreements? Proliferation,
Evaluation, and Multilateralization (Tokyo: Institute of Developing Economies, 2003).
61 Aggarwal and Koo make exactly the same argument when they note that Korea selected Chile
as its first FTA partner with the explicit goal of capacity building (for a more expansive discussion of
this issue see the article by Park and Koo in this volume). See Aggarwal and Koo, "Beyond Network
Power," p. 7.
62 Andrew Moravcsik, "Preferences and Power in the European Community: A Liberal
Intergovernmental Approach," Journal of Common Market Studies, vol. 31, no. 4 (1993), pp. 473-524.
63 Ronald Rogowski, Commerce and Coalitions: How Trade Affects Domestic Political Alignments
(Princeton: Princeton University Press, 1989).
250
sensitive sectors, non-application of fair trade remedies) that could increase

their leverage when negotiating with intra-regional partners or in larger
forums such as the WTO. As these examples reveal, precedent setting can
be a double-edged sword, sometimes working in favour of trade
liberalization - using foreign pressure against protectionist domestic
groups - and others working against market opening, thereby sending signals
to prospective FTA partners that some sensitive sectors are off limits.
Importantly, CRTAs allow East Asian governments to hone their trade
negotiation skills, to marginalize domestic opponents to trade liberalization
and to set precedents on negotiations modalities in a risk-free environment,
since they do not fear the security externalities of FTA negotiations with
potential regional rivals, and they can also minimize the overall liberalization
adjustment burden by negotiating with minor extra-regional trade partners.
It is important to consider as well the interplay of the economic, security,
and leverage motives in a country's overall CRTA policy. We envision at least
two patterns of interaction. First, whether a country adopts an offensive or
defensive approach in its CRTA policy will likely influence the specific
motivations behind the selection of CRTA partners. A government using
CRTAs assertively will pursue a high profile FTA diplomacy to enhance its
leadership status, and/or will try to maximize the gains from trade or the
leverage gains from cross-regional trade agreements both domestically and
internationally. In those cases, it is more likely for the country to choose
large trading partners in other regions to achieve these goals. On the other
hand, a defensive CRTA posture will be consistent with a reactive response
to trade diversion, and the goal to overcome the fear of being left behind in
the world of international trade. In this case, small trading partners will be
an appropriate choice, for they are less likely to demand major domestic
economic adjustments and might also be easier partners in a negotiation.
Second, the interaction of economic, security and leverage variables will
also be influenced by the overriding pressures to which the government is
responding through CRTA policy. If in line with realism and intergovern-
mentalism, the government is mostly concerned with power politics, then
CRTAs will seek to advance security interests and prestige through free trade
agreements that cement security bonds or that portray a benign leadership
image. If, on the other hand, the government embarks on CRTAs mostly as
a response to lobbying efforts from domestic economic actors, then the search
for preferential market access, the elimination of trade diversion and the
leverage gains of capacity building and precedent setting will prevail.
Findings: Environmental Factors and Country Case Studies

As noted before, we found several environmental factors in the region
which encourage the development of cross-regional initiatives, ranging from
trade and investment links outside the region, to alliance patterns with an
251
Table 3
Explaining East-Asian Cross-Regionalism:

Regional Factors and Country-Specific Motives
Regional Regional factors factors favouring favouring cross-regionalism cross-regionalism
Economic 1) Continued reliance on extra-regional economic

partners as export outlets and investment sources
Security 2) Hub-and-spoke alliance system and discouragement by
extra-regional hegemon of exclusive Asian regional
blocs
3) Unabated historical and regional tensions among

neighbours in East Asia
Factors Factors influencing influencing the the choice choice of of cross-regional cross-regional partners partners
Economic
Market Access Thailand and Korea: Gain access to the key American
market
Trade Diversion Japan: Avoid the losses Japanese companies reported

from operating in Mexico without preferential FTA
access
China: Negotiate with countries possessing a

network (Chile) in order to position itself to
discrimination and gain access to third mark
Security
Reinforce security Korea: Improve ties with its main security partner, the
arrangements United States
Raise international China: Emphasize through FTA policy the cooperative
status aspects of China's economic rise
Thailand and Korea: Emerge as trade hubs through the
development of an FTA network
Leverage
Capacity Building Korea, Japan, China, Malaysia: Learn from consummate
FTA negotiators in a risk-free environment due to modest
liberalization adjustment costs. This "on-the-negotiation"
training for bureaucratic cadres deemed useful to engage
later on in FTA negotiations with larger economic partners
Creating Korea and Japan: Use FTA negotiation to win domestic
precedents battles on economic reform and agricultural liberalization
and gain international credibility as an FTA negotiator
On the other hand, Thailand has emphasized an FTA
"lite" approach to minimize domestic restructuring
China: Use CRTAs to advance recognition of China as a
"market economy/' a precedent that could be of
252
extra-regional hegemon wary of potential exclusion, and to continuing

historical and territorial frictions within the region (see table 3) . For these
reasons, East Asian governments frequently find it easier to negotiate with
extra-regional partners where the security hurdles are not high, and where
issues of regional exclusion or the "history card" do not cloud the prospects
of successful negotiation.
Despite these common regional factors, the motives behind the selection
of cross-regional partners have varied widely as is evident in the analyses of
the specific cases of East Asian cross-regionalism undertaken by the
contributors to this special issue. Park and Koo seek to explain the motivation
behind South Korea's choice of Chile as its first preferential partner and the
emergence of a more proactive FTA strategy enabling the country to engage
the United States in FTA talks. Solis and Katada explain why Japan felt a
keen interest in negotiating with Mexico despite a modest overall volume of
trade and sharp opposition from the farm lobby. Hoadley probes into the
motivations behind Thailand's numerous cross-regional initiatives and
Malaysia's more guarded approach to CRTAs. Finally, Hoadley and Yang
underscore the rationales behind China's recent jump into the FTA
bandwagon and its interest in several cross-regional partners.
Collectively, the articles of this special issue speak not only of distinct
national reasons for embarking on cross-regionalism but also of
commonalities in these cross-regional trade initiatives. For instance, China
has a unique objective in its FTA policy, to assure others that China's economic
rise does not entail a zero-sum game but rather that it opens the possibility
of maximizing joint gains through FTAs and CRTAs. On the other hand, an
important motivation for Thailand and Korea to pursue CRTAs is to increase
their economic visibility and clout by reinventing themselves as FTA hubs.
Just as some Latin American nations had done before them, CRTAs allowed
Thailand and Korea to market themselves as "bridge countries" linking
different regions.
Trade diversion has also played differently as a motivation for several
East Asian nations in cross-regional partnerships. In the cases of Thailand,
Malaysia and China, it appears as a diffuse concern about the possibility of
not having preferential trade agreements in a world of proliferating FTAs.
China's prime reason for negotiating a CRTA with Chile has been to avoid
trade discrimination from further regional integration in the Americas and
to gain access to the countries that are within Chile's large FTA network.
However, the benefits of the Chilean springboard to other markets will be
tempered by the need to comply with rules of origin,64 and China has not yet
64 The same reservation applies to the efforts of Thailand and Korea noted above to position
themselves as trade hubs: access to their FTA network is contingent on the compliance with different
rules of origin.
253
responded with a CRTA initiative with Mexico, Canada or the United States
to counteract the one case where it suffered greatly from trade diversion,
NAFTA's strict origin rules for textiles. In sharp contrast, trade diversion was
the driving force behind Japan's negotiation of a CRTA with Mexico. When
specific Japanese industries (government procurement, automobiles and
electronics) suffered tangible losses as Mexico's FTAs altered the rules of
market operation, they mobilized to secure similar preferences through a
CRTA.
These differences aside, many of the CRTAs analyzed in this special issue
do share some important common traits. One important trend is the decision
of some East Asian countries to negotiate a CRTA with the United States.
This move does represent a fundamental challenge for Thailand and Korea.
As Hoadley reports, Thailand and the US are at loggerheads over crucial
issues, such as intellectual property protection, and talks have been suspended
amid domestic political backlash and political crisis for the Thaksin
administration. As Park and Koo remind us, despite proactive position of
the Roh administration and Korea's foreseen security benefits, the Korea-
US FTA negotiation had to overcome serious hurdles regarding agricultural
liberalization and the movie screen quota. Therefore, despite the major
prospective welfare gains, the jury is still out on how the FTAs with the United
States will impact East Asia's intra- and cross-regional FTA dynamics.
And yet there are numerous other cross-regional initiatives which actually
only promise modest aggregate economic benefits that demand explanation.
We argue that leverage gains arising from cross-regionalism are crucial to
understand the motivations of East Asian nations to negotiate with small
cross-regional economic partners (see tables 2 and 3). All the East Asian
nations studied here have used their cross-regional FTA initiatives for capacity-
building purposes in a low-risk environment. By teaming up with consummate
FTA negotiators from outside the region, countries like Korea, China and
Japan could learn the ropes of negotiating preferential market access without
incurring large economic and security costs. The small overall volume of
trade between countries in these CRTAs meant fewer adjustment costs from
trade liberalization, but geographical distance and the absence of security
rivalries also meant that these CRTAs would minimize negative security
externalities, such as the often-noted concern of strengthening through
economic cooperation a potential military foe. These CRTAs were considered
advantageous as well in that they constituted relatively self-contained trade
negotiation exercises unlikely to be "contaminated" by the volatility of
intractable historical, territorial, or leadership disputes.
In fact, the governments' interests in leverage emerges as the key
analytical variable linking cross-regional overtures with simultaneous
negotiation processes at the WTO and at intra-regional levels. This is true
not only because bureaucratic cadres in East Asia receive on-thejob training
from extra-regional FTA counterparts which influence their subsequent FTA
254
behaviour, as observed when Japan switched to negative list for service

liberalization after negotiations with Mexico, but also because of the benefits
of precedent setting. These precedents can be both international and
domestic. For instance, China deliberately used CRTAs to reward countries
endorsing its status as a market economy. As Hoadley and Yang point out,
achieving such a designation is an important goal for China at the WTO,
given its large implications for antidumping procedures. For both Korea
and Japan, CRTAs with their Latin American counterparts were considered
the litmus test on their credibility as FTA negotiators since they would
represent the first cases of WTO-plus liberalization in agricultural markets.
Passing such a test was considered essential to lure other large agricultural
exporters in East Asia to sit at subsequent FTA negotiation tables.
Trade bureaucrats in Korea and Japan also deemed these CRTAs key to
dismantle the hold of the farm lobby on trade policy, and they used them as
tools to win domestic political battles. However, agricultural interests in both
countries fiercely resisted proposals for substantial trade liberalization, and
political compromises were worked out to rescue these negotiations. As Park
and Koo note, in the case of Korea, the agricultural lobby's opposition to
the CRTA with Chile was bought out through a huge monetary compensation
deal. In the case of Japan, the compromise involved no cash payments, but
substantial carve-outs in the agricultural liberalization package. The
difference in the side payments offered by these governments to appease
their agricultural sectors may be due to the timing of the agricultural
mobilization against the trade negotiations. The Korea-Chile CRTA essentially
entailed a ratification crisis, whereas in the Japan-Mexico CRTA, the
mobilization of the agricultural lobby to block substantial trade concessions
in agriculture took place earlier. These differences aside, for both the Korean
and Japanese governments, the success of their CRTAs with Chile and Mexico
respectively was deemed essential to demonstrate to the potential regional
FTA partners that they could sign FTAs with agricultural exporters.
Conclusion
In closing, this special issue on East Asian cross-regionalism has sought

to answer three important questions. Why has East Asia embarked on cross-
regionalism in an early stage of their FTA ventures? Why have East Asian
governments selected specific extra-regional partners? And, in which way
are cross- and intra-regional trade initiatives linked? We believe that the
insights generated by this collection of articles are important to our
conceptual understanding of the process of preferential integration as wel
as to the policy implications of FTA proliferation in several ways.
First and most importantly, by distinguishing between intra- and extra-
regional FTAs, we identify the mechanisms through which seemingly trivial
CRTAs, from an economic standpoint, do impact the unfolding of East Asian
255
regionalism by building bureaucratic capacity, by boosting international FTA

credibility and by setting domestic political compromises on market opening
which shape subsequent FTA negotiations. Under regional constraints, many
East Asian countries attempt early cross-regional negotiations in order to
strengthen their capacity and leverage for subsequent intra-regional
negotiations. In this way, cross-regional initiatives are very important
components of unfolding East Asian intra-regionalism. These dynamics predict
a complex and competitive process towards an exclusively regional FTA.
Second, the collective findings of this special issue open new lines of
inquiry, for example, on how developmental models might affect the choices
made by East Asian countries regarding regionalism and cross-regionalism.
Although tentative at best, a few possible patterns are suggested by this
collection of country cases. In pattern one, economies with a large
internationalized business sector but heavily protected agricultural sector,
such as Japan or South Korea, use FTAs to level the playing field in overseas
markets for their internationally competitive industries while hammering a
political compromise on some form of shelter or compensation for sensitive
sectors. In pattern two, smaller countries in Southeast Asia like Thailand
and Malaysia that are heavily dependent on foreign economic exchange but
have sizable vested interests are climbing aboard the FTA bandwagon in
hopes of securing an inflow of foreign direct investment, but they are shying
away from acquiring liberalization commitments that threaten core political
interests, such the position of Thaiconglomerates or the Bumiputera policy
in Malaysia.
China, a rising socialist market economy, defies easy characterization,
however. On the one hand, diplomatic considerations are paramount in-
Chinese FTA initiatives as it seeks to meet its energy needs and assure others
of the positive externalities of China's "peaceful rise" through FTA diplomacy.
On the other hand, the Chinese government does not face the tug and pull
of conflicting interest groups as more pluralistic societies do. Nevertheless,
exhausted from very demanding WTO obligations, the country has
downplayed WTO plus commitments in its bilateral and minilateral trade
deals. We believe that further comparative analysis of East Asian regional
and cross-regional FTA initiatives along these lines could yield important
insights.
Finally, the globalisni-regionalism debate remains a very important policy
question. What will be the implications of these CRTAs on East Asian
regionalism and the multilateral trading system? Indeed, all the East Asian
countries studied in this special issue developed multi-track trade strategies
incorporating FTA diplomacy, since they did not consider exclusive
adherence to the WTO feasible in a world increasingly defined by selective
trade and investment preferences among FTA partners. But the launch of
an East Asian FTA strategy is characterized by the simultaneous pursuit of
256
regional and cross-regional preferential trading arrangements. The heavy

dose of cross-regionalism could have profound implications on the essence
of East Asian regional integration.
Despite the shift for the first time in East Asia towards binding preferential
trade agreements, East Asian regionalism might still be relatively porous. If
countries outside the region are among the first to gain preferential access,
the cohesiveness of a regional bloc will be diluted by the crisscrossing CRTAs
that East Asian nations are negotiating ahead of building a region-wide bloc.
If this is the case, East Asian regionalism poses less of a threat to the
multilateral system in terms of partitioning the world economy into inward
discriminatory blocs. At the same time, CRTAs can also influence the strategy
of East Asian governments vis-a-vis the WTO. A case in point is China's
strategic decision to use CRTAs as an incentive for a wider recognition of its
status as a market economy, which would have profound consequences in
the determination of the dumping cases which today stand as a major form
of protectionism against Chinese products. Seen in this light, CRTAs are a
useful tool for the bottom-up reform of the WTO.
The CRTAs actively pursued by East Asian governments in recent years
capture patterns of strategic interactions among national, regional and global
forces. These governments are not merely "pushed away" from a region rife
with conflicts and competitions as they pursue the CRTAs; rather, they engage
with extra-regional partners because of domestic political considerations of
promoting competitive industries and enticing domestic protectionist forces
to compromise. At the regional level, the strategic nature of the CRTAs is
more evident, as many of these governments seek intra-regional bargaining
leverage as they accumulate precedents and skills through cross-regional
negotiations. Finally, at the global level, East Asian governments try to
influence the WTO agenda through their numerous regional and cross-
regional agreements, showing that they are now prepared to go beyond their
status as aggressive exporters and emerge as more assertive players in the
global trade regime.
American University, Washington, D.C., U.S.A. and

University of Southern California, Los Angeles, U.S.A., November, 2006
257

Asian Cross-Regionalism An Analytical Framework PDF

Cargado por

Información del documento

Título original

Derechos de autor

Formatos disponibles

Compartir este documento

Compartir o incrustar documentos

Opciones para compartir

¿Le pareció útil este documento?

¿Este contenido es inapropiado?

Copyright:

Formatos disponibles

Asian Cross-Regionalism An Analytical Framework PDF

Cargado por

Copyright:

Formatos disponibles

Introduction: Understanding East Asian Cross-Regionalism: An Analytical Framework

Author(s): Mireya Solís and Saori N. Katada

deserve further theoretical treatment.2 In fact, conventional theories of

countries embarked on cross-regionalism much sooner, when they were just

American and European practice of solidifying first their regional blocs;

East Asia in a cross-regional world

preferential trade agreements in East Asia was the inauguration of the

The Number ofRTAs and CRTAs by Region and by Time

East Asia 's Regional and Cross-Regional FTAs as of June 2007

Singapore - China RTA Agreed to negotiate 2004

Theories of cross-regionalism: One step behind

12 See especially Mansfield and Milner, "The New Wave of Regionalism."

"embedded mercantilism" in his analysis of Japanese political economy,

provides a comprehensive coverage and systemic analysis of bilateral trade

More specifically, some studies on individual cases of cross-regional tra

Explaining East Asian Cross-Regionalism

The previous section made clear that an understanding of the factors

regional FTA counterparts. By laying out these possible explanations in a

Regional factors favouring cross-regionalism

In the recent past, East Asia has experienced significant economic

Security and diplomatic factors

36 See Katzenstein and Hemmer, "Why is There No NATO in Asia?"

The first official blueprints for an exclusive Asian economic grouping,

campaign to develop nuclear weapons. Moreover, Japanese aggression during

Diversity in Motives: Explaining Cross-regional Partner Choices

As noted above, East Asian nations are exposed to a number of regional

Main rationales behind the selection of cross-regional FTA partners

Reinforce The desire to use economic diplomacy in order to cement

Raise inter- The desire to exercise "benign" leadership on a wide stage

Creating a) The wish by policy-makers to "lock-in" controversial

regional security cleavages, historical animosities and territorial disputes and

trade opportunities among economies with a high degree of economic

deteriorating terms of trade and stricter investment rules on their multi-

Security and diplomacy motives

The use of economic diplomacy to serve larger security interests is an old

52 See Mattli, The Logic of Regional Integration, p. 60.

threats (ASEAN's anti-Communist stance), to cement security ties with

in world economic affairs can, therefore, serve as important motivations

sensitive sectors, non-application of fair trade remedies) that could increase

Findings: Environmental Factors and Country Case Studies

Explaining East-Asian Cross-Regionalism:

Economic 1) Continued reliance on extra-regional economic

3) Unabated historical and regional tensions among

Trade Diversion Japan: Avoid the losses Japanese companies reported

China: Negotiate with countries possessing a

extra-regional hegemon wary of potential exclusion, and to continuing

behaviour, as observed when Japan switched to negative list for service

In closing, this special issue on East Asian cross-regionalism has sought

regionalism by building bureaucratic capacity, by boosting international FTA

regional and cross-regional preferential trading arrangements. The heavy

American University, Washington, D.C., U.S.A. and

También podría gustarte