GO 357 The Political Economy of Regionalism

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GO 357The Political Economy of Regionalism

• Walter Hatch
• Colby College
• Asia or Asia-Pacific

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Is this Region called Asia?

• A racially defined, geographically finite space

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Asia

• Northeast Asia (Tigers, Dragons)
• Japan
• ROK (South Korea)
• Greater China
• PRC (Mainland China)
• Hong Kong SAR
• ROC (Taiwan)
• Singapore (da hub)
• Southeast Asia (New Tigers, Little Dragons)
• Malaysia and Brunei
• Indonesia
• Thailand
• The Philippines
• Indochina (Vietnam, Cambodia, Laos)
• Myanmar

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Or is the region called Asia-Pacific?

• A racially mixed, geographically expansive space

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Asia-Pacific( Asia some)

• North America
• Latin America
• Oceania
• Australia
• New Zealand
• Russia

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And what about India?
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Two Questions

• What drives the high level of regionalization?
• What causes the low level of regionalism?

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High Regionalization
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Asias Intra-regional Exports(1999-2005)
2005
2003
2001
1999
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Asian Exports (by destination) 1990
Other
Europe
Asia
North America
Source WTO
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Asian Exports (by destination) 2005
Other
Europe
Asia
North America
Source WTO
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Intra-regional Trade ( of total)
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FDI to Asia
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FDI to China and India (1982-2003)
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Regional Institutions

• ASEAN
• APEC
• EAEG/EAEC
• ASEAN 3
• East Asian Summit

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ASEAN
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ASEAN Basics

• Created in 1967 as pro-capitalist
  (anti-communist) trade bloc
• 10 member states
• Population of about 559 million
• Combined gross domestic product of US884 billion

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ASEAN Organization

• Secretariat in Jakarta. Headed by
  secretary-general, who serves a five-year term.
  Supported by small staff (about 40).
• Key work is done in annual summit meetings. The
  ASEAN Way works by consensus, and carefully
  protects national sovereignty.
• Treaty of Amity and Cooperation in Southeast Asia
  (1976) spells out non-interference in internal
  affairs of members as one of the founding
  principles of ASEAN.

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ASEAN Real Integration

• ASEAN Free Trade Area (AFTA), 1992
• CEPT of 5 by 2008
• ASEAN Vision 2020
• Results
• exports among ASEAN countries grew from US43.26
  billion in 1993 to almost US80 billion in 1996,
  an average yearly growth rate of 28.3 percent.
• share of intra-regional trade rose from 20
  percent to almost 25 percent
• Pace slowed, though, in 1998

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APEC
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APEC Basics

• Created by Japan and Australia in 1989
• Invigorated by Clinton in 1993
• A meta-region
• 21 countries
• Russia and Peru?
• Population of over 2.6 billion
• Combined GDP of more than 20 trillion
• Members account for nearly 47 percent of world
  trade.

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APEC Organization

• Secretariat, located in Singapore, established in
  1993
• 21 officials seconded by member economies for
  fixed terms
• Small permanent staff (about 30)

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APEC Goals

• Bogor Declaration (1994) achieve free and open
  trade and investment in the Asia-Pacific by 2010
  for developed economies and 2020 for developing
  economies.
• Three pillars
• Trade and Investment Liberalization
• Business Facilitation
• Economic and Technical Cooperation

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APEC Few achievements

• Operates by consensus
• Thus, nothing gets done
• Conflicting ambitions
• EVSL (1996) as example
• Identified 15 sectors
• Pared down to two fisheries and forest products
• Japan pulls out

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East Asia Economic Group

• Former Malaysia PM Mahathir (1990)
• Asia for Asians
• No Oceania, no US
• US opposition
• Japanese reluctance
• EAEG becomes EAEC (caucus)

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ASEAN 3

• Japan, South Korea and China join ASEAN economic
  ministers at annual meetings
• Asian Monetary Fund proposal (1997)
• More US opposition
• Chiang Mai Initiative for bilateral currency
  swaps
• Asian bond program
• Asian currency regime

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East Asian Summit

• Chinas idea
• no US, please
• ASEAN as core
• India, please
• And the Oceania-2
• 16 members
• First summit in KL in 2005

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New Regionalism

• Singapore gets antsy
• Bilateral agreements
• China emerges as new leader
• FTA with ASEAN (2002)
• Japan tries to catch up

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Bilateral FTAs
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More Bilateral FTAs
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WHY SO LITTLE HARD REGIONALISM?
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Possible Explanations

• Nationalism
• Legacy of colonialism
• Illiberal states
• Security externalities of interdependence
• US role
• Hub-and-spokes relationship
• Divergent cultures
• Divergent levels of development