Asian FTAs: Trends and Challenges

ADBI Working Paper No. 144

40 Pages Posted: 1 Oct 2009

See all articles by Masahiro Kawai

Masahiro Kawai

Asian Development Bank Institute

Ganeshan Wignaraja

Asian Development Bank

Date Written: September 30, 2009

Abstract

Although a latecomer, economically important Asia has emerged at the forefront of global free trade agreement (FTA) activity. This has sparked concerns about the negative effects of Asian FTAs, including the “noodle bowl” problem. Amid slow progress in the World Trade Organization’s (WTO) Doha negotiations and the global financial crisis, however, Asian regionalism seems to be here to stay and the focus for policymakers should be how best to minimize the costs of FTAs while maximizing their benefits. Adopting a pragmatic perspective, this paper examines key trends and challenges in Asian FTAs. It provides new evidence from firm surveys, analysis of specific agreements, and computable general equilibrium estimates. It makes a case for strengthening the support system for using FTAs, rationalizing rules of origin and upgrading their administration, ensuring better coverage of agricultural trade, forging comprehensive “WTO-plus” agreements, and encouraging a region-wide FTA. Political economy considerations suggest that a likely scenario is for FTA consolidation in Asia to be followed by connections with North America and Europe. In conclusion, a bottom-up approach to a Doha Round Agreement emerges from the analysis.

Keywords: WTO, Doha Round Agreement, Asian Free Trade Agreements, rules of origin, FTAs

JEL Classification: F1, F15, O24

Suggested Citation

Kawai, Masahiro and Wignaraja, Ganeshan, Asian FTAs: Trends and Challenges (September 30, 2009). ADBI Working Paper No. 144 , Available at SSRN: https://ssrn.com/abstract=1480508 or http://dx.doi.org/10.2139/ssrn.1480508

Masahiro Kawai

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki Chiyoda-ku
Tokyo, 100-6008
Japan

Ganeshan Wignaraja (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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