go 357 the political economy of regionalism

GO 357GO 357The Political Economy of The Political Economy of

RegionalismRegionalism

Walter HatchWalter Hatch

Colby CollegeColby College

Asia or Asia-PacificAsia or Asia-Pacific

Is this Region called Is this Region called “Asia?”“Asia?”

A “racially” defined, A “racially” defined, geographically finite spacegeographically finite space

““Asia”Asia” Northeast Asia (Tigers, Dragons)Northeast Asia (Tigers, Dragons)

• JapanJapan• ROK (South Korea)ROK (South Korea)• Greater ChinaGreater China

PRC (Mainland China)PRC (Mainland China) Hong Kong SARHong Kong SAR ROC (Taiwan)ROC (Taiwan)

Singapore (da hub)Singapore (da hub) Southeast Asia (New Tigers, Little Dragons)Southeast Asia (New Tigers, Little Dragons)

• Malaysia and BruneiMalaysia and Brunei• IndonesiaIndonesia• ThailandThailand• The PhilippinesThe Philippines• Indochina (Vietnam, Cambodia, Laos)Indochina (Vietnam, Cambodia, Laos)• MyanmarMyanmar

Or is the region called Or is the region called “Asia-Pacific?”“Asia-Pacific?”

A “racially” mixed, A “racially” mixed, geographically expansive geographically expansive

spacespace

““Asia-Pacific”Asia-Pacific”(= Asia + some)(= Asia + some)

North AmericaNorth America Latin AmericaLatin America OceaniaOceania

• AustraliaAustralia• New ZealandNew Zealand

RussiaRussia

And what about India?And what about India?

Two QuestionsTwo Questions

What drives the high level of What drives the high level of regionalization?regionalization?

What causes the low level of What causes the low level of regionalism?regionalism?

High RegionalizationHigh Regionalization

Asia’s Intra-regional ExportsAsia’s Intra-regional Exports(1999-2005)(1999-2005)

19991999

2001200120032003

20052005

Asian Exports (by destination) 1990Asian Exports (by destination) 1990

AsiaAsia

NorthNorth

AmericaAmerica

EuropeEurope

OtherOther

Source: WTOSource: WTO

Asian Exports (by destination) 2005Asian Exports (by destination) 2005

Source: WTOSource: WTO

AsiaAsiaNorthNorth

AmericaAmerica

EuropeEurope

OtherOther

Intra-regional Trade (% of total)Intra-regional Trade (% of total)

0

10

20

30

40

50

60

70

80

FDI to AsiaFDI to Asia

FDI to China and India (1982-2003)FDI to China and India (1982-2003)

Regional InstitutionsRegional Institutions

ASEANASEAN APECAPEC EAEG/EAECEAEG/EAEC ASEAN + 3ASEAN + 3 East Asian SummitEast Asian Summit

ASEANASEAN

ASEAN: BasicsASEAN: Basics

Created in 1967 as pro-capitalist Created in 1967 as pro-capitalist (anti-communist) trade bloc(anti-communist) trade bloc

10 member states10 member states Population of about 559 millionPopulation of about 559 million Combined gross domestic product of Combined gross domestic product of

US$884 billionUS$884 billion

ASEAN: OrganizationASEAN: Organization

Secretariat in Jakarta. Headed by Secretariat in Jakarta. Headed by secretary-general, who serves a five-year secretary-general, who serves a five-year term. Supported by small staff (about 40).term. Supported by small staff (about 40).

Key work is done in annual summit Key work is done in annual summit meetings. The “ASEAN Way” works by meetings. The “ASEAN Way” works by consensus, and carefully protects national consensus, and carefully protects national sovereignty.sovereignty.• Treaty of Amity and Cooperation in Southeast Treaty of Amity and Cooperation in Southeast

Asia (1976) spells out “non-interference in Asia (1976) spells out “non-interference in internal affairs of members” as one of the internal affairs of members” as one of the founding principles of ASEAN.founding principles of ASEAN.

ASEAN: Real IntegrationASEAN: Real Integration

ASEAN Free Trade Area (AFTA), 1992ASEAN Free Trade Area (AFTA), 1992• CEPT of 5% by 2008CEPT of 5% by 2008

ASEAN Vision 2020ASEAN Vision 2020 Results:Results:

• exports among ASEAN countries grew from exports among ASEAN countries grew from US$43.26 billion in 1993 to almost US$80 US$43.26 billion in 1993 to almost US$80 billion in 1996, an average yearly growth rate billion in 1996, an average yearly growth rate of 28.3 percent.of 28.3 percent.

• share of intra-regional trade rose from 20 share of intra-regional trade rose from 20 percent to almost 25 percentpercent to almost 25 percent

• Pace slowed, though, in 1998Pace slowed, though, in 1998

APECAPEC

APEC: BasicsAPEC: Basics

Created by Japan and Australia in 1989Created by Japan and Australia in 1989 Invigorated by Clinton in 1993Invigorated by Clinton in 1993 A meta-regionA meta-region

• 21 countries21 countries• Russia and Peru?Russia and Peru?

Population of over 2.6 billionPopulation of over 2.6 billion Combined GDP of more than $20 trillionCombined GDP of more than $20 trillion Members account for nearly 47 percent of Members account for nearly 47 percent of

world trade.world trade.

APEC: OrganizationAPEC: Organization

Secretariat, located in Singapore, Secretariat, located in Singapore, established in 1993established in 1993

21 officials seconded by member 21 officials seconded by member economies for fixed termseconomies for fixed terms

Small permanent staff (about 30)Small permanent staff (about 30)

APEC: GoalsAPEC: Goals

““Bogor Declaration” (1994): achieve Bogor Declaration” (1994): achieve free and open trade and investment free and open trade and investment in the Asia-Pacific by 2010 for in the Asia-Pacific by 2010 for developed economies and 2020 for developed economies and 2020 for developing economies.developing economies.

Three pillarsThree pillars• Trade and Investment LiberalizationTrade and Investment Liberalization• Business FacilitationBusiness Facilitation• Economic and Technical CooperationEconomic and Technical Cooperation

APEC: Few achievementsAPEC: Few achievements

Operates by consensusOperates by consensus• Thus, nothing gets doneThus, nothing gets done

Conflicting ambitionsConflicting ambitions EVSL (1996) as exampleEVSL (1996) as example

• Identified 15 sectorsIdentified 15 sectors• Pared down to two: fisheries and forest Pared down to two: fisheries and forest

productsproducts• Japan pulls outJapan pulls out

East Asia Economic GroupEast Asia Economic Group

Former Malaysia PM Mahathir (1990)Former Malaysia PM Mahathir (1990)• ““Asia for Asians”Asia for Asians”• No Oceania, no USNo Oceania, no US

US oppositionUS opposition Japanese reluctanceJapanese reluctance EAEG becomes EAEC (caucus)EAEG becomes EAEC (caucus)

ASEAN + 3ASEAN + 3

Japan, South Korea and China join ASEAN Japan, South Korea and China join ASEAN economic ministers at annual meetingseconomic ministers at annual meetings

Asian Monetary Fund proposal (1997)Asian Monetary Fund proposal (1997)• More US oppositionMore US opposition

Chiang Mai Initiative for bilateral currency Chiang Mai Initiative for bilateral currency swapsswaps

Asian bond programAsian bond program Asian currency regimeAsian currency regime

East Asian SummitEast Asian Summit

China’s ideaChina’s idea• no US, pleaseno US, please

ASEAN as coreASEAN as core• India, pleaseIndia, please• And the Oceania-2And the Oceania-2

16 members16 members First summit in KL in 2005First summit in KL in 2005

New RegionalismNew Regionalism

Singapore gets antsySingapore gets antsy• Bilateral agreementsBilateral agreements

China emerges as new leaderChina emerges as new leader• FTA with ASEAN (2002)FTA with ASEAN (2002)

Japan tries to catch upJapan tries to catch up

Agreement Date of Entry Into Force

India - Singapore Free Trade Area Agreement Sign date: 29-Jun-05

Japan-Mexico Economic Partnership Agreement 1-Apr-05

Thailand - Australia Free Trade Agreement (TAFTA) 1-Jan-05

Republic of Korea - Chile Free Trade Agreement 1-Apr-04

United States - Singapore Free Trade Agreement 1-Jan-04

Panama-Republic of China (Taiwan) Free Trade Agreement

1-Jan-04

Singapore - Australia Free Trade Agreement 28-Jul-03

ASEAN - China Free Trade Agreement 1-Jul-03

EFTA - Singapore Free Trade Agreement 1-Jan-03

ASEAN Free Trade Agreement (AFTA) 1-Jan-03

Japan - Singapore Economic Partnership Agreement 30-Nov-02

India — Sri Lanka Free Trade Agreement 15-Dec-01

New Zealand - Singapore Closer Economic Partnership (CEP)

1-Jan-01

Bilateral FTAsBilateral FTAs

Agreement Date of Entry Into Force

Japan-Thailand Economic Partnership Agreement Sign date: 03-Apr-07

US-Korea Free Trade Agreement Sign date: 02-Apr-07

Japan-Chile Economic Partnership Agreement Sign date: 27-Mar-07

Japan-Phillipines Economic Partnership Agreement Sign date: 08-Sept-06

Panama-Singapore Free Trade Agreement 24-Jul-06

Trans-Pacific Strategic Economic Partnership

New Zealand and Singapore: 28-May-06

Brunei: 12-July-06 Chile: 08-Nov-06

EFTA - Republic of Korea Free Trade Agreement 1-Sept-06

Iceland: 1-Oct-06

Japan - Malaysia Economic Partnership Agreement 13-Jul-06

China-Chile Free Trade Agreement 1-Jul-06

New Zealand - Thailand Closer Economic Partnership (CEP)

1-Jul-06

Republic of China (Taiwan)-Nicaragua Free Trade Agreement

Sign date: 16-Jun-06

Republic of Korea - Singapore Free Trade Agreement 2-Mar-06

Republic of China (Taiwan)-Guatemala Free Trade Agreement

1-Jan-06

Jordan - Singapore Free Trade Area Agreement 22-Aug-05

More Bilateral FTAsMore Bilateral FTAs

WHY SO LITTLE “HARD” WHY SO LITTLE “HARD” REGIONALISM?REGIONALISM?

Possible ExplanationsPossible Explanations

NationalismNationalism• Legacy of colonialismLegacy of colonialism

Illiberal statesIlliberal states Security externalities of interdependenceSecurity externalities of interdependence US roleUS role

• Hub-and-spokes relationshipHub-and-spokes relationship Divergent culturesDivergent cultures Divergent levels of developmentDivergent levels of development