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April 2004
| Author: | Edward J. Lincoln, Director, Center for Japan-U.S. Business and Economic Studies, New York University |
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This module examines economic regionalism in East Asia and its implications for U.S. policy in the region, but it also addresses several important themes relevant to university level economic, political economy, international relations or regional studies courses.
What is a CFR Academic Module?
Academic Modules—featuring teaching notes by the authors of CFR publications—are designed to assist educators in creating or supplementing a course syllabus. The modules are customized packages built around a primary CFR text, such as a book or report, and include teaching notes; additional readings; video, audio, and transcripts of CFR meetings; Foreign Affairs articles; and other online resources. Use of these modules is free of charge. They may be used in part or in their entirety.
April 2004
Edward J. Lincoln takes up critical questions concerning the East Asian economy in this timely and important book and explores what is happening to regional trade and investment flows and explains what sort of regional arrangements would be the most attractive for the United States, and for the world economy.
By Edward J. Lincoln
This book primarily examines economic regionalism in East Asia and its implications for U.S. policy in the region, but it also addresses several important themes relevant to university level economic, political economy, international relations or regional studies courses. These teaching notes provide summaries of four major related themes, as well as suggested talking points for each theme. Depending on the degree of specialization of the class, instructors may wish to use these talking points as the basis for in-class discussion or debate, or may assign them as topics for more detailed out of class assignments such as essays or longer written assignments. A list of additional reading material accompanies each theme. Links to relevant online economic data sources is also included.
I. Major Themes and Questions
1) Multilateralism vs. Regionalism
One of the major arguments of this book is that regional economic groupings are undesirable because they create distortions in trade and investment, impose unnecessary economic costs, detract attention away from multilateral negotiations, or may even create racial or ethnic divides between one region and the rest of the world. In short, while preferential liberalization at the bilateral or regional level may be better than no liberalization at all, these agreements are only a second best solution.
Critics of this view insist that free trade agreements need not be limited to the global level and that regional or bilateral trade groupings are overall beneficial. As suggested by the example of Japan’s losing out to the North American Free Trade Agreement, preferential trade agreements may prompt an outsider to attempt to gain insider status through the negotiation of additional free trade agreements with other insiders. An outsider may also seek status as a member of an existing agreement. Politically, these groupings also have the potential to create constructive relationships or dialogues that can contribute to increased regional security and cooperation, even if their economic impacts are minimal.
Suggested Talking Points:
Additional Readings:
2) U.S.Trade Policy
Since taking office, the Bush administration has followed a trade policy of “competitive liberalization,” simultaneously pursuing trade agreements at the global, regional, and bilateral levels. While declaring the realization of the Doha Development Round Agenda goals as a top priority, the administration has alsoincreased the number of countries with which the United States has signed free trade agreements from three to twelve.
In East Asia the United States has completed Free Trade Agreements with Australia and Singapore, and is currently negotiating an agreement with Thailand. At the global level, it has worked to add Cambodia and China as new members of the WTO. Outside the region, the United States recently completed a free trade area with five Central America n Nations and the Dominican Republic (CAFTA-DR), which it hopes to eventually expand to the hemispheric level through the Free Trade Area of the Americas (FTAA). President Bush has also announced his desire to build upon existing FTAs with Jordan and Israel, aiming to creat e a Middle East Free Trade Area (MEFTA) by 2013.
Suggested Talking Points:
Additional Readings:
3) Japanese Trade Policy
Until negotiations formally began in 2001 on the Japan Singapore Economic Partnership Agreement (JSEPA), Japanese trade policy had followed a multilateral path under the GATT and WTO framework(s). With the signing into effect of the JSEPA on January 14, 2002, Japan joined the growing ranks of countries to have entered preferential trading agreements. Since then Japan has completed a second economic partnership agreement with Mexico, and has completed various stages of negotiating agreements with a number of other countries.
Suggested Talking Points:
Additional Readings:
4) Regionalism and Future Leadership in the Region
On the issue of regional leadership, the book concludes that although Japan is the obvious candidate, a number of problems, including economic and historical difficulties with its neighbors, as well as Japan’s unwillingness to sacrifice its strong ties to the United States are likely to prevent Japan’s rise as a leader. The possibility of China’s accession to regional leader is hampered by a similar series of problems, such as its increasing military activities in the region and its neighbors’ fears of being dominated economically. Because of mutual mistrust along these lines between Japan and China, it is equally unlikely that a joint-leadership shared by these two powers will develop in the near future.
Suggested Talking Points:
Additional Readings:
II. Online Data Sources
1) Global Data
2) U.S. Data
3) Japan Data
4) East Asia Data
October 2001
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