EU-Asia Free Trade Areas? Economic and Policy Considerations

This paper analyzes key aspects of the changing economic relationship between the European Union (EU) and Asia, and explores the potential economic ramifications of deeper EU-Asian economic cooperation. The author investigates the possible costs to the EU of remaining “disengaged” from the Asian integration process and the likely impact of multi-nested EU-Asian trade agreements. His empirical review of CGE models revealed trivial effects of several possible EU-Asian accords (e.g., EU-India, EU-ASEAN, EU-Republic of Korea). In part, this is a result of relatively small trade shares, open markets, and restrictions in the models, particularly in that they excluded behind-the-border effects. He also presents two CGE models that estimate the potential negative effects of Asian/Asia-Pacific regional accords on the EU, and likewise found small effects. Nevertheless, using a highly-disaggregated (partial-equilibrium) approach, he argues that high-quality FTAs in Asia could be quite detrimental to the EU, particularly in key sectors. The push toward a Free Trade Area of the Asia Pacific could be particularly worrisome to the EU. It is therefore concluded that it makes sense for the EU to be more aggressive in pursuing prospective trade agreements with Asia.asia eu economic cooperation; asia eu trade; free trade areas

The ASEAN Economic Community and the European Experience

In November 2002, the Association of Southeast Asian Nations (ASEAN) committed itself to the creation of an ASEAN Economic Community (AEC), in which goods, services, capital, and skilled labor would flow freely by the year 2020, or possibly even 2015. Hence, the AEC will guide the ASEAN integration agenda for at least the medium-term. The object of this paper is to analyze the lessons (both positive and negative) for the AEC that might be gleaned from the European Union (EU)Â economic integration experience. The paper notes that while there is much that the EU experience can teach ASEAN, the region should not underestimate the substantive differences between the two regions or their differing historical contexts . Based on this analysis, the paper also suggests various approaches to the creation of the AEC that ASEAN might consider as it concretizes the AEC program.ASEAN economic integration; ASEAN Economic Community; EU integration and developing countries

The Post-Crisis Sequencing of Economic Integration in Asia: Trade as a Complement to a Monetary Future

Bilateral and regional cooperation initiatives in Asia have been growing in importance over the last five years. These accords span the real and financial sectors; rather than following the more typical pattern of Òtrade first, money laterÓ, recent policy initiatives involve the simultaneous implementation of trade and monetary/financial accords. Given this sequence, is there a case for monetary union in East Asia? Is there a case for expanded free-trade areas (FTAs) in the region? This paper attempts to answer these questions using a variety of empirical techniques, including a Computational General Equilibrium (CGE) model, to evaluate the economics of monetary/financial integration and various configurations of FTAs in Asia. We conclude that, at present, the post-sequencing of economic integration in Asia is developing such that trade agreements will ultimately complement the movement toward financial and monetary integration. While the political constraint on monetary union is real, it is argued that FTAs should help relax this constraint, adding a political complement to the trade complement.

Toward Win-Win Regionalism in Asia: Issues and Challenges in Forming Efficient Trade Agreements

Many economists tend to be skeptical of the merits of Free-Trade Areas (FTAs) due to their second-best nature, while others support them under certain conditions, particularly as they allow for a more comprehensive treatment of trade- and investment-related issues than is currently possible under the 149-member WTO. This paper endeavors to bridge this analytical chasm by developing a blueprint for âÂÂfirst-bestâ regionalism based on âÂÂbest practices.â It then applies the associated set of rules to existing FTAs in Asia (both intra- and extra-regional) to guage the degree to which they approach best practices. In summary, we find that most accords receive high marks in most areas, with the exception of âÂÂrules of originâ and certain service sectors.Asian integration; free trade agreement; best practices; Asian development

FDI EFFECTS OF ASEAN INTEGRATION

For the past two decades, ASEAN Member States have pursued intra-regional market liberalization in order to provide more flexibility to multinationals and therefore promote the region as a competitive production platform. Attracting FDI has been a key objective of this regional project. This paper describes and analyzes recent trends in FDI to and among ASEAN countries, mainly comparing FDI patterns before and after the Asian Crisis, to characterize and assess the region?s strategies to liberalize and facilitate investment. We find that FDI flows to ASEAN countries suffered after the Asian Crisis but have picked up since 2005. Moreover, ASEAN FDI is dominated by Singapore. In addition, the sectoral distribution of FDI has changed in some members of ASEAN (i.e., Malaysia, Singapore, and Thailand) but not in others. We also perform an econometric analysis of the determinants of FDI to check for ASEAN-specific changes in FDI in the post-Crisis period. Our results, after controlling for a host of factors, indicate that ASEAN countries suffered a fall in total FDI but experienced an increase in intra-regional FDI after 1998. Moreover, we do not find any significant impact of FDI in China on ASEAN FDI.ASSOCIATION OF SOUTH EAST ASIAN NATIONS (ASEAN), FOREIGN DIRECT INVESTMENT (FDI), ECONOMIC INTEGRATION, ASEAN INVESTMENT AREA, KNOWLEDGE CAPITAL MODEL

Monetary Integration in East Asia: Issues of Economic and Policy Convergence in a Comparative Context

In recent years, Asian policymakers have considered the possibility of promoting closer financial integration and, possibly, monetary union. This paper considers the economics of the decision to form a currency union in East Asia using the European experience as a benchmark. We also compare the appropriateness of an East Asian currency union to MERCOSUR. In sum, we find that a core group of five East Asian countries appear to meet the convergence criteria set out in the Maastricht Treaty, whereas some of the others are moving toward that goal. The macroeconomic indicators tend to be strong and symmetric.Monetary integration; ASEAN; Economic Integration; East Asia

The ASEAN Economic Community and the European experience

In November 2002, it was proposed at the Association of Southeast Asian Nations (ASEAN) Heads of Government meeting in Phnom Penh that the region should consider the possibility of creating an ASEAN Economic Community (AEC) by 2020. The name is evocative, for an Economic Community immediately brings to mind the European experience. In fact, when the Asian Pacific Economic Cooperation (APEC) was re-inventing itself, it was proposed that the words behind the organization's acronym be replaced with Asia-Pacific Economic Community. This idea was rejected explicitly for fear that it would give the impression that APEC was intending to move in the direction of the EC model, which was thought to be too controversial. --

Economic Development in China and Its Implications for East Asia

Economic development in China, East Asia, trade adjustment